statement of accounts 2012-13 · statement of accounts the council's accounts for the year...

Maidstone Borough Council – Statement of Accounts 2012/13

CONTENTS

Page

Explanatory Foreword

2

Explanation of the Purpose of the Primary Statements

9

Annual Governance Statement

11

Statement of Responsibilities for the Statement of Accounts

30

Primary Statements

31

Notes to the Accounts

35

Collection Fund and Notes

98

Glossary of Terms

102

Audit Opinion

105


EXPLANATORY FOREWORD

Review of 2012/13 Financial Year

2012/13 has been another challenging year for the Council. In setting the budget for the year a series of changes were implemented to the medium term

financial strategy and a plan put in place to deliver savings that would meet the Government reductions in funding whilst delivering the outcomes

required by the Council’s strategic plan. The Council has successfully delivered these changes for 2012/13.

After allowing for the carry forward of resources the revenue account showed a net underspend of £2.699m against the approved budget of £19.940m. The

Capital Programme has remained significantly on target and is fully funded through asset disposals, grants and use of resources set aside from revenue. The rate of collection on Council Tax and Non-Domestic rates has remained at an

acceptable level, and the return on investments made slightly exceeded the targeted figure over the course of the year.

The overall level of balances at 31st March 2013 was £12.511m, which was an increase of £2.406m over the year. This means that balances are above the

minimum approved level of working balances by £4.450m.

Considered together, these factors will allow the Council to begin 2013/14 on a financially sound basis with the ability to consider options for the most appropriate use of the increased level of balances.

Statement of Accounts

The Council's accounts for the year 2012/13, covering the period 1st April 2012 to 31st March 2013, are set out on the following pages. They consist of:

1. The Primary Statements, consisting of the Movement in Reserves Statement,

the Comprehensive Income & Expenditure Statement, the Balance Sheet and the Cash Flow Statement. The purpose of these statements is explained in

more detail in the section following this foreword.

2. Notes to the Accounts – these provide more detailed analysis and information

on significant balances and movements within the statements listed above.

3. The Collection Fund - shows the transactions of the Authority in relation to Non Domestic Rates, Council Tax and residual Community Charge (or Poll Tax). It illustrates the way in which these have been distributed to Preceptors

and the General Fund.

All the figures in the above sections have been rounded to the nearest £1000. This Statement has been produced in accordance with the requirements of the

Code of Practice on Local Authority Accounting for 2012/13, which now requires the Statement to comply with International Financial Reporting Standards

(IFRS), as adapted for the public sector.


These accounts are preceded by the Annual Governance Statement and the Statement of Responsibilities.

In line with the Accounts & Audit Regulations 2011 the Statement of Accounts is

now required to be signed off by the Responsible Financial Officer by 30th June, with the approval of the Audit Committee to be given by 30th September.

There were no significant changes to the accounting requirements for 2012/13.

Following the abolition by the Government of the Audit Commission the

Statement for 2012/13 will be audited by Grant Thornton, who successfully tendered for the contract for external audit services.

The Council's financial year runs from 1st April to 31st March. A summary of the Balance Sheet as at 31st March 2013 is shown below:

2011/12 2012/13

£000 £000

62,298 Property, Plant & Equipment 60,815

10,279 Heritage Assets 10,334

12,469 Investment Properties 12,567

617 Other Long Term Assets 703

25,851 Money owed to the Council 25,741

(12,712) Money owed by the Council (11,253)

(49,455) Long Term Liabilities (51,250)

49,347 Net Assets 47,657

10,269 Usable Reserves 14,275

39,078 Unusable Reserves 33,382

49,347 Total Reserves 47,657

The major movements in the Balance Sheet can be summarised as follows:

• The increase in money owed to the Council is primarily money due from

Central Government in respect of housing benefits. • Long term liabilities have increased as a consequence of an increase in the

pensions liability following the annual assessment of the fund by actuaries

acting on behalf of Kent County Council.

Comprehensive Income & Expenditure Statement

The Comprehensive Income & Expenditure Statement summarises the cost of all

General Fund services provided by the Council. The total budget requirement was calculated to be £19.940m, which was funded as follows:


£000

Revenue Support Grant 454

Non-Domestic Rate Income 5,923

Council Tax Income 13,563

Total 19,940

Parish precepts are not included in the above table.

The initial net spend of £20.193m was calculated as follows:

£000

Total Budget Requirement (from previous table) 19,940

General Underspend 150

Planned Contributions from Balances 100

Invest to Save 3

Net Spend on General Fund Services 20,193

The actual spend for revenue purposes was £18.647m, and there was a net increase in balances of £2.406m. The General Fund Balances at 31st March 2013

were £12.511m. A summary of the revenue spend for 2012/13 is shown below:

Original

Estimate

Revised

Estimate Actual

Variance

to

Revised

Portfolio £000 £000 £000 £000

Leader of the Council 993 2,316 2,112 (204)

Community & Leisure Services 7,901 8,317 7,300 (1,017)

Corporate Services 915 2,706 (1,306) (4,012)

Economic Development & Transport 4,652 5,250 4,912 (338)

Environment 5,731 5,952 5,629 (323)

Total Service Spending 20,192 24,541 18,646 (5,895)

Significant variances within the above figures are as follows:

• Within Corporate Services there is an unused budget of £4.410m in respect of Revenue set aside to fund capital expenditure. This budget will

be carried forward to 2013/14. This budget was not required in 2012/13 as there were sufficient resources from capital receipts and capital grants to fund the programme.

• The Development Management service in the Economic Development &

Transport portfolio is reporting a total under spend of £0.353m. In the middle of 2012/13 financial year the Government approved a national increase in planning fees and the service has benefited from additional

income. In addition resources for potential enforcement cases are being maintained by the service.


• Within the Community & Leisure Services portfolio the Homelessness budget is over spent by £0.178m due to demand for that service resulting

in extensive use of bed and breakfast providers during the year. The capital budget for renovation grants was also under spent, and this is

reflected in reduced capital charges to this portfolio.

• Interest and investment income within the Corporate Services portfolio is

showing a positive variance of £0.141m. This is due to higher levels of invested funds creating higher levels of interest received along with the

correction of a misstated value for interest receivable in prior years’ accounts.

The figures in this table will differ from those shown in note 10 (Amounts Reported for Resource Allocation Decisions) as that note only covers the net cost

of services as shown in the Comprehensive Income & Expenditure Report, whereas the table above picks up figures that are not included within the net cost of services.

Expenditure & Income - The pie charts shown on the following page illustrate

in broad terms where the Council's money comes from and the services that it provides.

15% of the Council's income came from the services it provided through rents, fees and charges and interest. The largest single source of income was Specific

Government Grants, such as Rent Allowances, Council Tax Benefit and Housing Subsidy, which provide 63% of the total.

Spending – Where it Went

Leader of the

Council £2.261m

3% Community &

Leisure Services

£9.918m

11%

Corporate Services

(including Benefits)

£57.890m

63%

Economic

Development &

Transport £8.558m

9%

Environment

£13.25m

14%


Income – Where it Came From

Government Grants

£58.643m

62%Rents £1.185m

1%

Council Tax

£13.563m

15%

Revenue Support

Grant £0.115m

1%

Non-Domestic Rates

£5.924m

7% Investment Income

£0.382m

1%

Fees & Charges

£12.065m

13%

Capital Expenditure & Income

The Council spent £5.008m on Capital Projects compared to an original estimate

of £5.384m. As a result of unused resources carried forward to 2012/13 and other adjustments to the programme during the year the revised estimate was

set at £4.757m. Significant elements of the capital spending were the Mote Park Regeneration Scheme (£0.946m), Renovation Grants (£0.860m), Support for Social Housing (£1.048m) and the High Street Regeneration Scheme (£0.808m).

A summary of capital expenditure is shown below:

Original

Estimate

Revised

Estimate Actual

Variance to

Revised

£000 £000 £000 £000

Leader of the Council 0 0 0 0

Community & Leisure Services 1,610 1,465 3,720 (2,255)

Corporate Services 330 207 414 (207)

Economic Development & Transport 3,444 2,849 830 2,019

Environment 0 47 44 3

Total 5,384 4,568 5,008 (440)

The variance on Community & Leisure Services is due to the expenditure on the new play area at Cobtree Manor Park. However this is funded entirely by the

Cobtree Manor Estate Trust therefore there is no impact on Council resources. The variance on Corporate Services is due to expenditure relating the IT shared


service arrangement with Tunbridge Wells and Swale, and they will be funding the majority of the expenditure. The variance on Economic Development &

Transport was initial expenditure on phase 2 of the High Street Project, and this will be funded from resources identified in 2013/14.

Capital expenditure was funded as follows:

£000

Revenue Support 0

Disposal of Assets - Current & Previous Years 2,624

Other Grants & Contributions 2,384

Total 5,008

The disposal of assets during the year realised capital receipts of £3.524m, and

£0.966m of useable capital receipts have been carried forward for future use. In addition the Council has received £0.941m of funding to date from the Heritage Lottery Fund towards the Mote Park Regeneration Project. Funding of £0.296m

has also been received from the Cobtree Manor Estate Trust towards the new play area at Cobtree Manor Park, and a further £0.286m was received to fund

the new extension at the museum. Grants to the value of £0.558m have also been received from various sources to fund renovation grant payments.

Borrowing & Investments

The Council has adopted the requirements of the CIPFA Prudential Code for Capital Finance. This has given individual authorities responsibility for deciding

their own level of affordable borrowing, based on the guidelines laid out in the Code. However, there was no long-term borrowing during 2011/12, as there were sufficient resources available to fund the programme.

Investment income, which historically has been quite high, has now fallen to

lower levels, with interest of £0.402m being generated in 2012/13. (The figure for 2011/12 was £0.316m). This is a reflection of the current low level of interest rates, along with the lower level of resources available for investment. The level

of capital receipts has continued to fall as they are used to fund the capital programme, and the effects of the economic downturn means that the Council

has had difficulty in disposing of surplus assets which would have generated significant capital receipts.

Collection Fund

The Council is a Billing Authority, meaning it is responsible for collecting and

paying over Council Tax contributions on behalf of Kent County Council, Kent Police Authority, Kent and Medway Towns Fire Authority, and the Parish Councils

within the Borough area. The Council operates a Collection Fund into which it pays all income collected from the Council Tax and National Non-Domestic

Rates. The demands on the Fund for 2012/13 totalling £90.062m were as follows:


Authority £000

Maidstone Borough Council 13,562

Kent County Council 63,899

Kent Police Authority 8,457

Kent & Medway Towns Fire & Rescue Authority 4,144

Total 90,062

The Band D level of Council Tax in 2012/13 was £1,476.80, which breaks down

as follows:

Authority £.p

Maidstone Borough Council 222.39

Kent County Council 1,047.78

Kent Police Authority 138.68

Kent & Medway Towns Fire & Rescue Authority 67.95

Total 1,476.80

Individual additions to the Council Tax level were made to cover Parish Precepts

in parished areas. This level of Council Tax related to a property in Band D and by the application of statutory multipliers the corresponding amount was charged to all properties in Bands A-H.

Pensions

Note 37 to the Balance Sheet refers to the Disclosure of Net Pension Assets and

Liabilities. Under the requirements of IAS 19 (International Accounting Standard) on Retirement Benefits these figures are now reflected in the Council’s Balance Sheet and Comprehensive Income & Expenditure Statement. The latest

actuarial valuation carried out on behalf of the Kent County Council Pension Fund shows a small movement in the liability related to the pension scheme, from

£46.556m in 2011/12 to £48.986m in 2012/13.

Employers’ levels of contribution are determined by triennial actuarial valuations which are based on the Fund’s actual investment strategy (rather than being

based on corporate bond yields). The next actuarial valuation is due to take place on 31st March 2013 and the change in contribution rates as a result of that

valuation are to take effect from 1st April 2014. Other Comments

No post balance sheet events were identified during the preparation of the

Statement.

Future Developments

Following the recent introduction of IFRS there are no significant changes currently proposed for local government accounting.


The ongoing economic situation will continue to have a significant effect on the financial position of the Council in 2013/14. With continuing uncertainty over

new capital receipts, existing receipts will need to be used to fund the capital programme, which in turn will further reduce sums available to invest.

Investment income will be a smaller source of income than in previous years due to continuing low interest rates, and there is also likely to continue to be reduced income from fees and charges.

There is also the likelihood of further pressures arising from the Government’s

commitment to reduce the national budget deficit. Cuts to central government funding have meant that substantial budget reductions will continue to be made over the next few years.

The Council will continue to explore ways of reducing its costs through efficiency

savings, commercial initiatives, shared services and partnership working. There is now a formal arrangement with Swale and Tunbridge Wells Borough Councils in the form of the Mid-Kent Improvement Partnership (MKIP), and a number of

partnership arrangements are now established covering Internal Audit, Licensing, Revenues & Benefits and Legal Services. The Council launched its first

commercial venture offering a trade waste service during 2012/13, and will be looking at further initiatives

Authorised for Publication

This Statement was authorised for publication on 28th June 2013, the date it was signed by the Director of Regeneration & Communities as presenting a true and fair view of the financial affairs of the Council for 2012/13.

EXPLANATION OF THE PURPOSE OF THE PRIMARY

STATEMENTS

Movement in Reserves Statement

This Statement shows the movement in the year on the different reserves held by the Council, analysed into ‘usable reserves’ (i.e. those that can be applied to

fund expenditure or reduce local taxation) and other reserves. The Surplus (or Deficit) on the Provision of Services line shows the true economic cost of providing the Council’s services, more details of which are shown in the

Comprehensive Income & Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for

council tax setting purposes. The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Find Balance before any

discretionary transfers to or from earmarked reserves undertaken by the Council.

Comprehensive Income & Expenditure Statement

This statement shows the accounting cost in the year of providing services in

accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Councils raise taxation to cover expenditure

in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.


Balance Sheet

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Council. The net assets of the Council (assets

less liabilities) are matched by the reserves held by the Council. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Council may use to provide services, subject to the

need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to

fund capital expenditure or repay debt). The second category of reserves is those that the Council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example

the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences

shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’.

Cash Flow Statement

The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as

operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the

operations of the Council are funded by way of taxation and grant income or from the recipients of services provided the Council. Investing activities represent the extent to which cash outflows have been made for resources which

are intended to contribute to the Council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash

flows by providers of capital (i.e. borrowers) to the Council.


Annual Governance

Statement

2012/13


1. SCOPE OF RESPONSIBILITY

1.1 Maidstone Borough Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, that public money is safeguarded and properly accounted for, and used economically, efficiently and

effectively. Maidstone Borough Council also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. The Council’s section 151 Officer is a key member of the Corporate Leadership

Team, reviewing all decisions taken through management team, Committees, Cabinet and Full Council.

1.2 In discharging this overall responsibility, Maidstone Borough Council is responsible for putting in place proper arrangements for the governance of its affairs and facilitating the effective exercise of its functions which includes arrangements for the management of risk.

1.3 Where actions have been identified they are highlighted in speech bubbles at the appropriate point in the statement.

1.4 Maidstone Borough Council has approved and adopted a Local Code of Corporate Governance, this was reviewed and

update in June 2013. The code of corporate governance is consistent with the principles of the CIPFA/SOLACE

framework “Delivering Good Governance in Local Government”. A copy of the Code is on the website at www.maidstone.gov.uk or can be obtained from the Council at Maidstone House, King Street, Maidstone, Kent ME15

6JQ. This statement explains how Maidstone Borough Council has complied with the code and also meets the requirements of regulation 4(3) of the Accounts and Audit (England) Regulations 2011.


In Autumn 2013 we will be re-introducing the

Annual Report.

2 THE PURPOSE OF THE GOVERNANCE FRAMEWORK

2.1 The governance framework comprises the systems and processes, and culture and values, by which the Council is directed and controlled and its activities through which it accounts to, engages with and leads the community. It

enables the Council to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.

2.2 The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide

reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of Maidstone Borough Council’s policies, aims and objectives. It evaluates the likelihood of those risks being realised and the impact should they be realised then

provides a means of managing the risks efficiently, effectively and economically.

2.3 This governance framework has been in place at Maidstone Borough Council for the

year ended 31 March 2013 and up to the date of approval of the annual report and

Statement of Accounts.


3 THE GOVERNANCE FRAMEWORK

3.1 The monitoring of Corporate Governance has a high priority at the Council. As part of the recent senior restructure, responsibility for Corporate Governance was moved to the Head of Policy and Communications. A small working group made up of the Head of Audit, Head of Finance and Resources and the Head of Legal services (Monitoring Officer) has

been set up to work with the Head of Policy and Communications reporting quarterly to the Corporate Leadership Team and six monthly to the Audit Committee on governance matters.

3.2 At appendix A are the Council’s pillars of governance this identifies they key strands of governance and the documents

and actions represented with-in each.

3.3 The Governance Framework is based on the CIPFA/SOLACE six principles of effective governance

1. Focusing on the purpose of the authority and on outcomes for the community and creating and implementing a

vision for the local area

2. Members and officers working together to achieve a common purpose with clearly defined functions and roles

3. Promoting values for the authority and demonstrating the values of good governance through upholding high

standards of conduct and behaviour

4. Taking informed and transparent decisions which are subject to effective scrutiny and managing risk

5. Developing the capacity and capability of members and officers to be effective

6. Engaging with local people and other stakeholders to ensure robust public accountability


How we deliver good governance

Principle Governance Mechanism (what we are doing) Assurance

Focusing on the

purpose of the

authority and on

outcomes for the

community and

creating and

implementing a vision

for the local area

• The vision for Maidstone is set out in our Sustainable

Community Strategy .

• The Strategic Plan reflects the vision and sets out our

priorities and outcomes. Each outcome has an action plan,

performance indicators and targets.

• The Annual Corporate Planning Cycle approved by Cabinet

facilitates the effective planning of service delivery, including

the identification of risks, and budget requirements.

• Performance Management of delivering our priorities and

services is achieved through ‘Reach the Summit’ and the

Council’s Performance Plan and Scrutiny Committees.

• The Council’s Values have been identified under the acronym

STRIVE.

• A project overview board exists and a project management

toolkit is utilised to develop and monitor major projects.

• The Sustainable Community Strategy was developed

following consultation with residents and engagement

in events to determine the priorities and vision for the

borough.

• One Council Engagement Plan is in place to

communicate our priorities internally.

• Resident Survey undertaken every two years to

understand priorities and issues for residents

• Monitoring against the key measures of success is

reported six monthly to Cabinet and Scrutiny.

• Key Performance Indicator outturns are subject to

review by Cabinet, Overview and Scrutiny committees

and ultimately, by full Council.

• Annual STRIVE staff awards based on our values.

STRIVE stands for Service, Teamwork, Responsibility

for delivering on our promises, Integrity, Value for

Money and Equality.

• The project board considers the major projects

currently being undertaken by the Council at a



strategic level and ensures resources are applied and

actions taken to maintain control over all such

projects.

Members and

Officers working

together to achieve a

common purpose

with clearly defined

functions and roles

• The Council’s Constitution specifies the roles and

responsibilities of Members and Officers and lays down

financial and contract procedural rules for the efficient and

effective discharge of the Council’s business. The

Constitution includes the roles and responsibility of the

Overview and Scrutiny and Audit Committees.

• A well established and effective Audit Committee and

Overview and Scrutiny function.

• Effective Audit function.

• The constitution is kept under constant review by the

Monitoring officer.

• Half yearly reports are produced for Audit Committee

which evaluates the overall internal control

environment tested through the internal audit work.

• An annual review of audit work and the effectiveness

of the audit process is produced for Audit Committee.

• Governance Arrangements were reviewed last year

and created four Overview and Scrutiny Committees

aligned to the Cabinet Portfolios. The role of overview

and scrutiny has been re-defined including ensuring

each has responsibility for scrutinising partnerships.

• A protocol has been put into place between Audit and

Scrutiny Committees to avoid duplication and overlap

on the work programme and facilitate appropriate

references between the committees.

• The Council is a member of a well established and

effective Internal Audit partnership that works to an



• The Council has appointed a Monitoring Officer to oversee

its compliance with laws and statutory obligations.

• The Council has clearly defined roles and responsibilities for

Members and Officers

• The Council has a Corporate Improvement Group who

identify improvement projects and review the impact of

change and improvement on a quarterly basis.

• Code of Corporate Governance in place

approved three year audit plan.

• Individual audit reports are produced for the relevant

managers, with a copy to the Chief Executive and

appropriate Director.

• External Audit produce a number of reports which are

reported to management and Members.

Recommendations and comments are considered and,

where necessary, action is taken to address any issues

raised.

• Scheme of Delegation is in place as defined in the

constitution

• Update on the Corporate Improvement Group

reported to Cabinet twice a year

• The Local Code of Corporate Governance was

reviewed and updated in June 2013.



Promoting values for the

authority and

demonstrating the

values of good

governance through

upholding high

standards of conduct

and behaviour

• Good Corporate Governance is at the heart of everything

the Council does, for staff this is incorporated into our six

core values (STRIVE) in the delivery of services and in

particular the value: Integrity and High Standards of

Corporate Governance. The Council has an annual award

ceremony focussed on our values, where individuals and

teams are given awards for demonstrating the values.

• At the mid year and full year appraisal points all staff are

asked how they demonstrate the values.

• The Audit Committee has a responsibility to monitor and

improve the arrangements for Corporate Governance

within the Council.

• The Council’s Monitoring Officer is responsible for ensuring

that the Council acts in accordance with the constitution.

• The Council has adopted a local code of conduct for

Members and Officers.

• The Council meets the requirements of the Public Sector

Equality Duty.

• HR procedures and systems are in place for disciplinary and

• Annual Award Ceremony for Staff focused on

the Values

• The Audit Committee provides an Annual Report to

Council on its effectiveness.

• The Monitoring Officer reports to Council and provides

advice to Members and Officers.

• The Section 151 officer and monitoring officer review

all reports for decision via our committee report

management system (moderngov).

• Equality Impact Assessment are carried out to

demonstrate equalities being taken into account in our

decision making.

• Corporate Equality Policy.

The Council’s Competency

Framework for staff is being

revised to more clearly link to

the Values (STRIVE)



capability management

• Quarterly reports to Corporate Leadership Team

Taking informed and

transparent decisions

which are subject to

effective scrutiny and

managing risk

• The Council commissioned an Overview and Scrutiny review

of its governance arrangements focussed on whether the

Council should change its system to a committee or an

alternative system. It was agreed to adopt an enhanced

scrutiny model with four Overview and Scrutiny

Committees aligned to the Cabinet Portfolios.

• An agreed Risk Management Strategy is in place with

identified corporate strategic risks and Management Action

Plans.

• Risk management is a standard heading for consideration of

all reports to Management Team and Members. A formal

risk assessment is required for reports which require

decisions on strategic issues or which seek approval for

significant projects.

• Heads of Service are asked to identify risks as part of their

annual review of service plans.

• The Council publishes details of all Council spending to

suppliers, senior officer salaries and details of all new

contracts via its website.

• Open meetings and webcasting

• Overview and Scrutiny report annually to full

council on their effectiveness and outcomes.

• The Strategic Risk Register is subject to regular

review. Risks to service delivery (operational

risks) have been accepted as the responsibility of

individual authorised officers and incorporated

into Service Plans. Heads of Service are

responsible for ensuring that their service

managers retain an effective operational risk

register.

Risk Assessments in relation to

service plans will be logged on

Covalent, the Council’s

performance management

system managers will be

supported with additional training



• Transparent and Evidence based decision making

• Meetings are webcast and agenda papers and

the access to information procedure rules are

complied with

• Reports include information on the options

considered alternatives and reason for decision

Developing the capacity

of Members and

Officers to be effective

• The Council has had an “Investors in People” (IiP) award for

a number of years, which involves demonstrating that the

Council has regular appraisals, service and training

planning, training evaluation forms, recruitment and

selection procedures and initiatives such as Work/Life

Balance. The Council was re-accredited with IiP early in

2011.

• We have revised our Member Development Policy.

• Annual Member development programme.

• New Member induction programme.

• Overview and Scrutiny Handbook.

• A well established staff appraisal process is in place and

guidance and training is available for all staff and managers.

• IiP Health Checks, compliance with IiP is

regularly reviewed the Council has a target to

be at gold level by 2015.

• Regular Member seminars and workshops.

• The Employment and Member Development

Panel reviews the development programme and

budget for Members annually.

• The Governance review in 2012-13 identified

that Member’s continued professional

development was crucial going forward.

• Appraisals are held at mid year and end of year

points with all staff, they include a section to

identify development needs.



• Workforce Strategy

• Service delivery by trained and experienced

people.

• Regular reports to the Member and Employment

Development Panel

Engaging with local

people and other

stakeholders to ensure

robust public

accountability

• Consultations are held on decisions affecting local people

and local people are encouraged to be involved, for

example the work on developing the Council’s Local Plan

• Engagement with stakeholders through the Locality Board

and supporting task groups

• Membership of the Chamber of Commerce and work

through the Chamber, Federation of Small Businesses,

Town Centre Management, Maidstone Tourism Association

and Rural Business Forums to engage businesses.

• Consultation feedback for example from the

budget and Local Plan development.

• Focus groups to inform policies and plans as

they develop

• Cabinet Roadshows

• Communication and Engagement Strategy

• Community Development Strategy

• Single point of contact for businesses in the

Borough established through the Economic

Development Team Business Visits, Business

Breakfasts and Lunch with Mayor held in order

to develop better relationships with the business

community

A new Communication and

Engagement Strategy will be

produced in 2013/14



• Annual consultation with residents on our budget

• We carry out a survey of residents every other year

• We launched a new website this year

• We are running a programme of neighbourhood action

planning (action plans to address issues identified by

residents)working locally with you to identify how we can

improve where you live.

• Two Public meetings will be held to allow the Council and

its Strategic Partners to debate with the public topics

chosen by the public as set out in the constitution.

• Budget Roadshows and/or online consultation

• Resident Survey

• Website tested by residents to ensure it is user

friendly

• Neighbourhood action planning reviewed and

monitored by scrutiny.

We have identified from our

residents survey that more could be

done to involve young people in

decision making

Public Debate Meetings to be re-

introduced


4 REVIEW OF EFFECTIVENESS

4.1 Maidstone Borough Council has responsibility for conducting, at least annually, a review of the effectiveness of the

system of corporate governance and internal control. This is undertaken by the Corporate Leadership Team. The review of effectiveness undertaken in 2012/13 is informed by the work of the internal auditors and the Council’s

Senior Officers who have responsibility for the development and maintenance of the overall governance environment, and also by comments made by the external auditors and other review agencies and inspectorates.

4.2 Internal Audit has concluded that substantial reliance can be placed on the overall adequacy and effectiveness of the

Council’s framework of governance, risk management and control. This opinion covers the period from 1 April 2012 to date.

4.3 The Council is able to confirm that its financial management arrangements conform with the governance requirements of the CIPFA statement on the role of the Chief Financial Officer in Local Government (2010).

4.4 A detailed post project review of the Museum East Wing Project has recently been completed and reviewed by the

Audit Committee. The review identified that the Council’s project management processes and control arrangements have significantly improved since the Museum project was commissioned.

4.5 A number of areas were identified in the proceeding statement where action is required these have been included within our significant governance issues for 2013-14 action plan below.


5 SIGNIFICANT GOVERNANCE ISSUES

Actions for 2012/13 as identified in the last Annual Governance Statement

Governance Issue Action Taken Completed/ or carry

forward

Audit reports:

Reports with levels of assurance lower than

substantial.

A report on Emergency Planning was followed up in August 2012 and the

control assurance was found to have increased from limited to Substantial.

Completed

Annual Audit Report:

Recommendations arising from report – review

and replace the asset register.

We have replaced our asset register. Completed

Actions arising from specific satisfaction level

results of the residents survey. Taken forward by service managers. Completed

Enhance project sponsorship.

New project sponsorship toolkit has been created.

Completed

Museum East Wing Project. Reviewed by Internal Audit and the Chief Executive actions taken

to ensure good arrangements, project and contractor management

arrangement for future projects.

Carried forward


Actions for 2013/14

Governance Issue Action Taken By When By Whom

Corporate Leadership Team

have identified a need to

Review the Council’s

approach to Information

Management

Objective have been appointed to

undertake a piece of work to review how

the Council manages information and

identify a vision and strategy going forward.

30 September 2013 Anna Collier, Project Manager

David Edwards Project Sponsor

Angela Woodhouse – responsible officer for

Information Management

Embedding Corporate

Governance and Ensuring

Best Practice is identified

A corporate governance working group will be

set up to report into the Audit Committee on

governance issues and the progress of the

action plan.

Quarterly with updates to

Audit Committee in

October and March

Angela Woodhouse

Project Management The report into the Museum East Wing

project by the Chief Executive has confirmed

that project management arrangements have

significantly improved to address financial,

planning and procurement of capital projects.

Ongoing Paul Riley, Head of Finance and Resources

reporting to CLT who will continue to

monitor the adequacy of project

management in the context of “lessons

learned” from the Museum Project.

The Council undertook a

follow up Stress survey in

December 2012. This

showed that we have

improved on most areas

from the one in 2011.

However action is still

required to return to the

ideal levels of stress in the

organisation.

As a result of the original stress survey in 2011

the Council developed the one council

engagement plan to focus on engaging all staff

in our priorities. Following on from this initial

piece of work we have now appointed the

Comms Lab to review how we engage with

employees looking at support for managers,

developing a coaching culture and tools for

employee engagement on our priorities.

The work with the Comms

Lab has started and the

revised competency

framework will be in place

by September.

Tools for managers will be

used throughout the year

in accordance with the

one council engagement

plan.

Dena Smart and Corporate Leadership Team



Testing the Council’s

approach to Strategic

Planning and Meeting its

outcomes for businesses and

residents in regard to the

economy

Corporate Peer Challenge from the LGA

Any actions resulting from recommendations

will be programmed following the review

31 October 2013 Cabinet and Corporate Leadership Team

Members’ Professional

Development

The governance review in

2012/13 identified that this

was an area for

improvement particularly in

relation to Members leading

and owning their

development.

The Member Development Policy has been

revised and moved to Democratic Services to

bring it closer to Members. Members will be

asked via committees to identify their training

needs and the process for attending

conferences will be simplified.

Policy Approved 10 July 2013

Implemented during 2013/14

Democratic Services and Members

The Council’s

Communication and

Engagement Strategy will be

revised in 2013/14

Revised Strategy to accompany the Strategic

Plan refresh

(Proposed timetable)

Drafted September 2013.

Cabinet Approved for

Consultation December 2013.

Overview and Scrutiny Invited

to Review January 2014.

Approved by Cabinet

February 2014.

Angela Woodhouse, Head of Policy and

Communications



The residents survey identified

that more work needed to be

done to engage young people

with the Council

An action plan has been developed and put

into place as one of the Council’s equality

objectives.

Public Debate Meetings are

meant to be held twice a year.

Consultation will be carried out to identify

issues of public concern for debate.

Meetings of full Council will then take place on

a topic of interest identified by the public.

Public Meetings will take

place in November 2013 and

April 2014.

Democratic Services with relevant services.


6 Certification We propose over the coming year to take steps to address the above matters to further enhance our governance

arrangements. We are satisfied that these steps will address the need for improvement that were identified in our review of effectiveness and will monitor their implementation and operation as part of our next annual review.

Leader of the Council:_______________________ Date:______________________

Chief Executive:____________________________

Date:_______________________


Monitoring Officer, attends all meetings of the

Corporate Leadership Team (CLT)

Effective Overview and Scrutiny Committees

Standards and Audit Committees in place

Corporate Project Board oversees all key

projects

Effective Internal Audit partnership

Audit Reports produced for service areas in line

with the approved Audit Plan

Annual Audit report to Audit and Council

External Audit, produce a number of reports

which are reported to management

Local Code of Corporate Governance agreed

annannually

Complaints monitored and reported

quarterly to CLT and Scrutiny

Reports available on the council’s

website

Senior Salaries, Spending with

Suppliers and Contracts published on-

line

The Locality Board is in the process of

being reviewed, the Board has several

working groups in place to meet

corporate priorities in partnership

with private public and voluntary and

community sector partners.

A partnership protocol has been

adopted for the Mid Kent

Improvement Partnership

Risk Management Strategy and action

plans agreed and implemented

Operational risks incorporated into

service plans

Risk Management is considered in all

reports to Corporate Leadership Team

and Members

Formal Risk assessment is required for

decisions on strategic issues or which

seek approval for significant projects

and funding

Reported to Audit Committee

An Annual Performance Plan is in place

aligned to the Strategic Plan

Reach the Summit monitors performance

of services internally on a quarterly basis

Quarterly performance reports to CLT,

Cabinet and Scrutiny

Annual Corporate Planning cycle in place to

identify service planning, risks and budget

requirements

Regular meetings held with heads of

service to monitor performance and ensure

compliance with a range of corporate

policies

IiP accreditation and health checks

Treasury Management Code

Prudential Indicators monitored daily

Appendix A - Pillars of Governance

Performance and Financial

Management

Transparency and

Partnership Working

Risk Management

Monitoring


STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT

OF ACCOUNTS

The Council’s Responsibilities

The Council is required to:

• Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In the Council, that officer is the Director

of Regeneration & Communities.

• Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.

• Approve the Statement of Accounts.

The Director of Regeneration & Communities’ Responsibilities

The Director of Regeneration & Communities is responsible for the preparation of

the Council’s Statement of Accounts in accordance with proper practices as set out in the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom (the Code).

In preparing this Statement of Accounts, the Director of Regeneration &

Communities has:

• Selected suitable accounting policies and applied them consistently.

• Made judgements and estimates that were reasonable and prudent. • Complied with the local authority Code.

The Director of Regeneration & Communities has also:

• Kept proper accounting records which were up to date. • Taken reasonable steps for the prevention and detection of fraud and

other irregularities.

I certify that this Statement of Accounts gives a true and fair view of the

financial position of the Council at the reporting date and of its expenditure and income for the year ended 31st March 2013.

Signed:

Zena Cooke, Director of Regeneration & Communities

Date: 28th June 2013


PRIMARY STATEMENTS

MOVEMENT IN RESERVES STATEMENT For the years ended 31st March 2012 & 2013

Genera

l Fund

Bala

nce

Capital

Receip

ts

Reserv

e

Capital Gra

nts

Unapplied

Tota

l Usable

Reserv

es

Unusable

Reserv

es

Tota

l Reserv

es

£000 £000 £000 £000 £000 £000

Balance at 31st March 2012 10,104 55 110 10,269 39,078 49,347

Movement in Reserves during

2012/13

Surplus or Deficit on the Provision of

Services (705) (705) (705)

Other Comprehensive Income or

Expenditure (985) (985)

Total Comprehensive Income or

Expenditure (705) 0 0 (705) (985) (1,690)

Adjustments between Accounting Basis

and Funding Under Regulation (Note 5) 3,184 988 539 4,711 (4,711) 0

Net Increase or Decrease before

Transfers to Earmarked Reserves 3,184 988 539 4,711 (4,711) 0

Transfers to/from Earmarked Reserves

Increase or Decrease in Year 2,479 988 539 4,006 (5,696) (1,690)

Balance at 31st March 2013 12,583 1,043 649 14,275 33,382 47,657

Genera

l

Fund

Bala

nce

Capital

Receip

ts

Reserv

e

Capital

Gra

nts

Unapplied

Tota

l Usable

Reserv

es

Unusable

Reserv

es

Tota

l

Reserv

es

£000 £000 £000 £000 £000 £000

Balance at 31st March 2011 9,939 1,468 70 11,477 55,510 66,987

Movement in Reserves during

2010/11

Surplus or Deficit on the Provision of

Services (2,630) (2,630) (2,630)

Other Comprehensive Income or

Expenditure (15,010) (15,010)

Total Comprehensive Income or

Expenditure (2,630) (2,630) (15,010) (17,640)

Adjustments between Accounting Basis

and Funding Under Regulation (Note 5) 2,795 (1,413) 40 1,422 (1,422)

Net Increase or Decrease before

Transfers to Earmarked Reserves 2,795 (1,413) 40 1,422 (1,422)

Transfers to/from Earmarked Reserves

Increase or Decrease in Year 165 (1,413) 40 (1,208) (16,432) (17,640)

Balance at 31st March 2012 10,104 55 110 10,269 39,078 49,347


COMPREHENSIVE INCOME & EXPENDITURE STATEMENT

For the years ended 31st March 2012 & 2013

2011/12 (Restated) 2012/13

Gross

Expenditure

Gross

Income

Net

Expenditure

Gross

Expenditure

Gross

Income

Net

Expenditure

£000 £000 £000 £000 £000 £000

23,962 (23,819) 143 Central services to the public 22,815 (20,860) 1,955

7,591 (2,479) 5,112 Cultural & Related Services 9,228 (4,273) 4,955

12,944 (3,635) 9,309 Environment & Regulatory Services 12,752 (5,195) 7,557

3,538 (1,183) 2,355 Planning Services 5,059 (1,830) 3,229

2,934 (3,246) (312) Highways and transport services 5,208 (5,651) (443)

46,576 (42,644) 3,932 Other housing services 50,614 (47,693) 2,921

2,281 (34) 2,247 Corporate and democratic core 2,306 (168) 2,138

123 123 Non distributed costs 1,690 (4) 1,686

99,949 (77,040) 22,909 Cost Of Services 109,672 (85,674) 23,998

1,166 (621) 545 Other Operating Expenditure (Note 7) 1,221 (490) 731

3,077 (316) 2,761 Financing and Investment Income and Expenditure (Note 8) 1,673 (859) 814

(23,585) (23,585) Taxation and Non-Specific Grant Income (Note 9) (24,838) (24,838)

2,630 (Surplus) or Deficit on Provision of Services 705

(1,592) Surplus or deficit on revaluation of non current assets (503)

16,602 Actuarial gains / losses on pension assets / liabilities

- Matching the entry to the pensions reserve

1,488

15,010 Other Comprehensive Income and Expenditure 985

17,640 Total Comprehensive Income and Expenditure 1,690

There were no items of a material nature that required a separate disclosure within Net Cost of Services.

2011/12 has been restated to reflect the inclusion of the Upper Medway Internal Drainage Board Levy in Other Operating Expenditure.


BALANCE SHEET

As at 31st March 2012 & 2013

31st March

2012 Notes

31st March

2013

£000 £000

62,298 Property, Plant & Equipment 17 60,815

12,469 Investment Property 18 12,567

10,279 Heritage Assets 19 10,334

572 Intangible Assets 21 663

11 Long Term Investments 22 11

34 Long Term Debtors 26 30

85,663 Long Term Assets 84,420

7,000 Short Term Investments 22 7,000

3,475 Assets Held for Sale 24 550

104 Inventories 25 106

8,475 Short Term Debtors 26 11,555

6,797 Cash & Cash Equivalents 27 6,529

25,851 Current Assets 25,740

0 Cash & Cash Equivalents 27 77

7,239 Short Term Creditors 28 6,882

2,880 Provision for Bad Debts 29 1,981

994 Deferred Liability 32/33 729

1,599 Capital Grants Receipts in Advance 30 1,584

12,712 Current Liabilities 11,253

83 Provisions 35 140

2,806 Deferred Liability 32/33 2,124

46,566 Other Long Term Liabilities 37 48,986

49,455 Long Term Liabilities 51,250

49,347 Net Assets 47,657

10,269 Usable Reserves 34 14,275

39,078 Unusable Reserves 35 33,382

49,347 Total Reserves 47,657


CASHFLOW STATEMENT

2011/12 2012/13

£000 Notes £000

2,630 Net (surplus) or deficit on the provision of

services

705

(250) Adjustments to net surplus or deficit on the

provision of services for non-cash

movements

44 (2,041)

1,400 Adjustments for items included in the net

surplus or deficit on the provision of services

that are investing & financing activities

45 6,547

3,780 Net cash flows from Operating activities 5,211

(2,368) Investing Activities 47 (4,839)

66 Financing Activities 48 (27)

1,478 Net increase or decrease in cash & cash

equivalents

345

(8,275) Cash & cash equivalents at the beginning of

the reporting period

(6,797)

(6,797)

Cash & cash equivalents at the end of

the reporting period (6,452)


NOTES TO THE ACCOUNTS ____________________________________________

1 - ACCOUNTING POLICIES

a) GENERAL PRINCIPLES

The Statement of Accounts summarises the Council’s transactions for the 2012/13 financial year and its position at the year-end of 31st March 2013. The

Authority is required to prepare an annual Statement of Accounts by the Accounts & Audit Regulations 2011 which those regulations require to be prepared in accordance with proper accounting practices. These practices

primarily comprise the Code of Practice on Local Authority Accounting in the UK 2012/13 and the Service Reporting Code of Practice 2012/13, supported by

International Financial Reporting Standards (IFRS) and statutory guidance issued under the 2011 Regulations.

The financial information contained in the accounts has the following qualitative characteristics, as laid out in the Code of Practice on Local Authority Accounting:

• Relevance • Reliability

• Comparability • Understandibility

In addition, the following accounting concepts have been given precedence in the preparation of the accounts:

• Going concern

• Primary legislative requirements

The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets.

b) ACCRUALS OF INCOME & EXPENDITURE

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:

• Revenue from the sale of goods is recognised when the Council transfers

the significant risk and rewards of ownership to the purchaser and it is probable that economic benefits or service potential associated with the transaction will flow to the Council.

• Revenue from the provision of services is recognised when the Authority

can measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the Council.


• Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their

consumption, they are carried as inventories on the Balance Sheet.

• Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made.

• Interest receivable on investments and payable on borrowings is

accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.

• Where revenue and expenditure have been recognised but cash has not

been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the

income that might no be collected.

c) CASH & CASH EQUIVALENTS

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition

and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Cashflow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the

Council’s cash management.

d) EXCEPTIONAL ITEMS

When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income &

Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Council’s financial performance.

e) PRIOR PERIOD ADJUSTMENTS, CHANGES IN ACCOUNTING POLICIES

AND ESTIMATES & ERRORS Prior period adjustments may arise as result of a change in accounting policies

or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current or financial years affected by the change and do

not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper

accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the

Council’s financial position or financial performance. Where a change is made, it


is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had

always been applied.

Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

f) CHARGES TO REVENUE FOR NON-CURRENT ASSETS

Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current assets during the year:

• Depreciation attributable to the assets used by the relevant service

• Revaluation & impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off.

• Amortisation of intangible fixed assets attributable to the service

The Council is not required to raise council tax to fund depreciation, revaluation

and impairment losses or amortisation. g) EMPLOYEE BENEFITS

Benefits Payable During Employment

Short-term employee benefits are those due to be settled within 12 months of the year-end. They include benefits such as wages and salaries, paid annual

leave and paid sick leave, bonuses and non-monetary benefits (e.g. cars) for current employees and are recognised as an expense for services in the year in

which employees render service to the Council. An accrual is made for the cost of holiday entitlements (or any type of leave e.g. time off in lieu) earned by employees but not taken before the year-end which employees can carry

forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the

employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the

financial year in which the holiday absence occurs.

Termination Benefits Termination benefits are amounts payable as a result of a decision by the

Council to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an

accruals basis to the Non Distributed Costs line in the Comprehensive Income & Expenditure Statement when the Council is demonstrably committed to the termination of an officer or a group of officers or making an offer or making an

offer to encourage voluntary redundancy.


Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount

payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the

Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash

paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end.

Post Employee Benefits

Employees of the Council are members of the Local Government Pensions Scheme, administered by Kent County Council (KCC). The Scheme is accounted

for as a defined benefits scheme:

• The liabilities of the KCC pension scheme attributable to the Council are

included in the Balance Sheet on an actuarial basis using the projected unit method – i.e. an assessment of the future payments that will be

made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc and projected earnings for current employees.

• Liabilities are discounted to their value at current prices, using a discount

rate specified by the actuaries (based on the indicative rate of return on high quality corporate bonds.)

• The assets of the KCC pension fund attributable to the Council are included in the Balance Sheet at their fair value:

o Quoted securities – current bid price o Unquoted securities – professional estimate

o Unitised securities – current bid price o Property – market value

• The change in net pensions liability is analysed into seven components:

o Current service cost – the increase in liabilities as a result of years

of service earned this year – allocated in the Income & Expenditure Account to the revenue accounts of services for which the employees worked.

o Past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in

earlier years – debited to the Net Cost of Services in the Income & Expenditure Account as part of Non Distributed Costs.

o Interest cost – the expected increase in the present value of

liabilities during the year as they move one year closer to being

paid – debited to Net Operating Expenditure in the Income & Expenditure Account.


o Expected return on assets – the annual investment return on the fund assets attributable to the Council, based on an average of the

expected long-term return – credited to Net Operating Expenditure in the Income & Expenditure Account.

o Gains/losses on settlements & curtailments – the result of actions to

relieve the Council of liabilities or events that reduce the expected

future service or accrual of benefits of employees - debited to the Net Cost of Services in the Income & Expenditure Account as part of

Non Distributed Costs. o Actuarial gains & losses – changes in the net pensions liability that

arise because events have not coincided with assumptions made at

the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Statement of Total Recognised

Gains & Losses. o Contributions paid to KCC pension fund – cash paid as employers’

contributions to the pension fund.

In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by the Council to the pension fund in the year, not the amount calculated according to the relevant accounting

standards. In the Statement of Movement on General Fund Balance this means that there are appropriations to and from the Pensions Reserve to remove the

notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and any amounts payable to the fund but unpaid at the year-end. The negative balance that arises on the Pensions

Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flows rather than

as benefits are earned by employees.

Discretionary Benefits

The Council also has restricted powers to make discretionary awards of

retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award and accounted for using the same policies as are applied to the Local Government Pension Scheme.

h) EVENTS AFTER THE BALANCE SHEET DATE

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date

when the Statement of Accounts is authorised for issue. Two types of events can be identified:

• Those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such

events. • Those that are indicative of conditions that arose after the reporting

period – the Statement of Accounts is not adjusted to reflect such events,

but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial

effect.


Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts.

i) FINANCIAL INSTRUMENTS

Financial Liabilities:

Financial Liabilities are recognised on the Balance Sheet when the Council

becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and are carried at their amortised cost. Interest is

charged to the Financing and Investment Income & Expenditure line in the Comprehensive Income & Expenditure Account.

Financial Assets:

Financial assets are classified into two types:

• Loans & Receivables – assets that have fixed or determinable payments

but are not quoted on an open market.

• Available-for-sale assets – assets that have a quoted market price and/or

do not have fixed or determinable payments.

Loans & Receivables are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their

amortised cost. Annual credits to the Financing & Investment Income and Expenditure line in the Comprehensive Income & Expenditure Statement for

interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For most of the loans that the Council has made, this means that the amount presented in the Balance Sheet is

the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income & Expenditure Statement is the amount receivable

for the year in the loan agreement.

j) GOVERNMENT GRANTS & CONTRIBUTIONS

Whether paid on account, by instalments or in arrears, government grants and

third party contributions and donations are recognised as due to the Council when there is a reasonable assurance that:

• The Council will comply with the conditions attached to the payments, and

• The grants and contributions will be received.

Amounts recognised as due to the Council are not credited to the Comprehensive Income & Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the

future economic benefits or service potential embodied in the asset acquired using the grant or condition are required to be consumed by the recipient as


specified, or future economic benefits or service potential must be returned to the transferor.

Monies advanced as grants and contributions for which conditions have not been

satisfied are carried on the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation & Non-Specific Grant

Income (non-ringfenced revenue grants and all capital grants) in the Comprehensive Income & Expenditure Statement.

Where capital grants are credited to the Comprehensive Income & Expenditure Statement , they are reversed out of the General Fund Balance in the Movement

in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it has

been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

k) HERITAGE ASSETS

Tangible Heritage Assets (described in this summary of significant accounting policies as heritage assets)

The Council’s Heritage Assets fall into the following main categories:

• Museum Exhibits • War Memorials

• Statues, Sculptures and other works of art • Listed Buildings

Heritage Assets are recognised and measured (including the treatment of revaluation gains and losses) in accordance with the Council’s accounting

policies on property, plant and equipment. However, some of the measurement rules are relaxed in relation to Heritage Assets, and the valuation methods applied are as follows:

• Replacement Cost • Purchase Cost

• Insurance Valuation

Where it is considered impractical (in terms of cost and/or benefit) to obtain a valuation there is no requirement to do so, but any assets that are treated in this way must be disclosed in the Heritage Assets note.

The carrying amount of Heritage Assets are reviewed where there is evidence of

impairment e.g. where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the Council’s general policies on impairment.


l) INTANGIBLE ASSETS

Expenditure on non-monetary assets that do not have physical substance but are identifiable and controlled by the Council (i.e. software licences) is

capitalised when it will bring benefits to the Council for more than one financial year. The balance is amortised to the relevant service revenue account over the economic life of the investment to reflect the pattern of consumption of benefits.

Expenditure on the development of websites is not capitalised if the website is

solely or primarily intended to promote or advertise the Council’s goods or services.

Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Council can be determined by

reference to an active market. In practice, no intangible asset held by the Council meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life to

the relevant service line(s) in the Comprehensive Income & Expenditure Statement. An asset is tested for impairment whenever there is an indication

that the asset might be impaired – any losses recognised are posted to the relevant service line(s) in the Comprehensive Income & Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is

posted to the Other Operating Expenditure line in the Comprehensive Income & Expenditure Statement.

Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and

losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the

Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve.

m) INVENTORIES & LONG-TERM CONTRACTS Inventories are included in the Balance Sheet at the lower of cost and net

realisable value. The cost of inventories is assigned using the First-In First-Out costing formula.

Long-term contracts are accounted for on the basis of charging the Surplus or

Deficit on the Provision of Services with the value of works received under the contract during the financial year.

n) INVESTMENT PROPERTIES

Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale.

Investment properties are measured initially at cost and subsequently at fair

value, based on the amount at which the asset could be exchanged between knowledgeable parties at arm’s-length. Properties are not depreciated but are revalued annually according to market conditions at year-end. Gains and losses

on revaluation are posted to the Financing and Investment Income &


Expenditure line in the Comprehensive Income & Expenditure Statement. The same treatment is applied to gains and losses on disposal.

Rentals received in relation to investment properties are credited to the

Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The

gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account

and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve. o) LEASES

Lease are classified as finance leases where the terms of the lease transfer

substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases.

Where a lease covers both land and buildings, the land and buildings elements

are considered separately for classification.

Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.

The Council as Lessee

Finance Leases:

Property, Plant & Equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at

the lease’s inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs of the Council are added to the carrying amount of

the asset. Premiums paid on entry into a lease are applied to writing down the lease liability.

Lease payments are apportioned between:

• A charge for the acquisition of the interest in the property, plant or equipment - applied to write down the lease liability, and;

• A finance charge (debited to the Financing and Investment Income &

Expenditure line in the Comprehensive Income & Expenditure Statement).

Property, Plant & Equipment recognised under finance leases is accounted for

using the policies applied to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life (where ownership of the asset does not transfer to the Council at the end of the lease

period)


The Council is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead a prudent

annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and

revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for

the difference between the two.

Operating Leases: Rentals paid under operating leases are charged to the Comprehensive Income &

Expenditure Statement as an expense of the service benefiting from the use of the leased property, plant or equipment. Charges are made on a straight-line

basis over the life of the lease, even if this does not match the pattern of the payments.

The Council as Lessor

Finance Leases:

The Council has no leases classified as finance leases. Operating Leases:

Where the Council grants an operating lease over a property or an item of plant

or equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Other Operating Expenditure line in the Comprehensive Income & Expenditure Statement. Credits are made on a straight-line basis over the life of

the lease, even if this does not match the pattern of payments. Initial direct costs incurred in negotiating and arranging the lease are added to the carrying

amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income.

p) OVERHEADS & SUPPORT SERVICES

The costs of support services and overheads are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2012/13. The total absorption costing

principle is used – the full cost of overheads and support services are shared between users in proportion with the benefits used, with the exception of:

• Corporate & Democratic Core – costs relating to the Council’s status as a multi-functional democratic organisation.

• Non-distributed Costs – the cost of discretionary benefits awarded to

employees retiring early.

These two cost categories are defined in the Service Expenditure Reporting Code of Practice 2012/13 and accounted for as separate headings in the


Comprehensive Income & Expenditure Statement, as part of Net Expenditure on Continuing Services.

q) PROPERTY, PLANT & EQUIPMENT

Assets that have physical substance and are held for use in the provision of services or for administrative purposes on a continuing basis.

Recognition

All expenditure on the acquisition, creation or enhancement of Property, Plant & Equipment is capitalised on an accruals basis in the accounts. Expenditure on

fixed assets is capitalised, provided that the asset value is over £10,000 and yields benefits to the Council and the services it provides, for a period of more than one year. This excludes expenditure on routine repairs and maintenance of

fixed assets which is charged direct to service revenue accounts.

Measurement

Assets are initially measured at cost, comprising:

• The purchase price

• Any costs attributable to bringing the asset to the location and condition

necessary for it to be capable of operating in manner intended by management

Assets are then carried in the Balance Sheet using the following measurement bases:

• Infrastructure, Community Assets and Assets Under Construction - Depreciated Historical Cost

• All other Assets – Fair Value, determined as the amount that would be paid for the asset in its existing use (Existing Use Value – EUV)

Where there is no market-based evidence of Fair Value because of the specialist nature of an asset, Depreciated Replacement Cost (DRC) is used as an estimate

of Fair Value.

Where non-property assets that have short useful lives or low values (or both), Depreciated Historical Cost basis is used as a proxy for Fair Value.

Assets included in the Balance Sheet at Fair Value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from

their Fair Value at the year-end, but as a minimum every 5 years. Increases in valuation are matched by credits to the Revaluation Reserve to recognise unrealised gains. (Exceptionally, gains might be credited to the Comprehensive

Income & Expenditure Statement where they arise from the reversal of a loss previously charged to a service.)

Where decreases in value are identified, they are accounted for by:


• Where there is a balance of revaluation gains for the asset in the

Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains)

• Where there is no balance in the Revaluation Reserve or an insufficient

balance, the carrying amount of the asset is written down against the

relevant service line(s) in the Comprehensive Income & Expenditure Statement.

The Revaluation Reserve contains revaluation gains recognised since 1st April 2007 only, the date of its formal implementation. Gains arising before that date

have been consolidated into the Capital Adjustment Account.

Component Accounting

International Accounting Standard 16 (IAS16) – Property, Plant and Equipment (PPE) contains the accounting requirements for the separate recognition, depreciation and derecognition of parts of assets (referred to as

componentisation). Componentisation shall be applied for depreciation purposes on enhancement, acquisition expenditure incurred and revaluations carried out

from 1st April 2010.

Components that are required to be depreciated separately are those that have a cost that is significant in relation to the total cost of the asset, a different useful life and method of depreciation.

The policy adopted is as follows:

• Components of an asset will be separated where their value is significant in relation to the total value of the asset and where those components have different useful lives to the remainder of the asset for depreciation

purposes. • Where there is more than one significant component part of the same

asset with the same useful life, such component parts will be group together for deprecation purposes.

• A component may be an individual item or similar items with similar useful

lives grouped. • Where a component is replaced or restored, the carrying amount of the

old component will be derecognised and the new component added. Where the carrying value of the derecognised/replaced component is not known a best estimate will be determined by reference to the current

cost. • Only assets with a gross book value of £1.5 million and over will be

considered for componentisation. • Of those assets, for the purpose of determining a ‘significant’ component

of an asset, components with a value of 25% in relation to the overall

value of the asset or over £500,000 will be considered and then only if the component has a different useful life for depreciation purposes so as to

result in depreciation charges that differ materially from the depreciation charges had the asset not been componentised.


• On componentisation any Revaluation Reserve balances will remain with the structure of the building. Any future revaluation gains and losses will

be applied across components as appropriate.

Impairment

Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist and any possible differences

are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment

loss is recognised for the shortfall.

Where impairment losses are identified, they are accounted for by:

• Where there is a balance of revaluation gains for the asset in the

Revaluation Reserve, the carrying amount of the asset is written down against the balance (up to the amount of the accumulated gains)

• Where there is no balance in the Revaluation Reserve or an insufficient

balance, the carrying amount of the asset is written down against the

relevant service line(s) in the Comprehensive Income & Expenditure Statement.

Where an impairment loss is reversed subsequently, the reversal is credited to

the relevant service line(s) in the Comprehensive Income & Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss has not been recognised.

Depreciation

Depreciation is provided for on all Property, Plant & Equipment assets by the

systematic allocation of depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets) and assets that are not yet

available for use (i.e. assets under construction).

Depreciation is calculated on the following bases:

• Buildings – straight-line allocation over the useful life of the property as estimated by a suitably qualified officer.

• Vehicles, Plant, Furniture & Equipment – straight-line allocation over the useful life of the asset as estimated by a suitably qualified officer.

• Infrastructure - straight-line allocation over 20 years.

Where an item of Property, Plant & Equipment has major components whose cost is significant in relation to the total cost of the item, the components are

depreciated separately. This is a straight-line allocation over the useful life of the component as estimated by a suitably qualified officer.

Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and depreciation that


would have been charged based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.

Disposals & Non-current Assets Held for Sale

When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its

continuing use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and then carried at the lower value of this

amount and Fair Value less costs to sell. Where there is a subsequent decrease to Fair Value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income & Expenditure Statement. Gains

in Fair Value are recognised only up to the amount of any previous losses recognised in the Surplus or Deficit on Provision of Services. Depreciation is not

charged on Assets Held for Sale.

If assets no longer meet the criteria to be classified as Assets Held for Sale, they

are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale; adjusted for

depreciation, amortisation or revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the

date of the decision not to sell.

Assets that are to be abandoned or scrapped are not classified as Assets Held for Sale.

When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant & Equipment or Assets Held

for Sale) is written off the Other Operating Expenditure line in the Comprehensive Income & Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the

Comprehensive Income & Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of

disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.

Amounts received for a disposal in excess of £10,000 are categorised as capital

receipts. These are credited to the Capital Receipts Reserve, and can then only be used for new capital investment. Receipts are appropriated to the Reserve

from the General Fund Balance in the Movement in Reserves Statement.

The written-off value of disposals is not a charge against Council Tax, as the cost of fixed assets is fully provided for under separate arrangements for capital

financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.


r) DEFERRED LIABILITIES

Deferred Liabilities are recognised under the terms of IFRIC 12 (IFRS

Interpretations Committee) and the arrangement is recognised as a service concession, and accounted for accordingly. This generally involves the grantor

(the Council) conveying to the operator (Serco) for the period of the concession the right to provide services that give the public access to major economic and social facilities, in this instance Maidstone Leisure Centre.

s) CONTINGENT LIABILITIES/ASSETS

Contingent liabilities and assets are recognised in the notes to the Balance Sheet. The contingent liability is not recognised within the accounts as the date

of the possible transaction concerned is not sufficiently certain at this stage. The contingent asset is not accrued in conformity with the concept of prudence.

t) RESERVES

The Council sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When

expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus or Deficit on the

Provision of Services in the Comprehensive Income & Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against Council

Tax for the expenditure.

Certain reserves are kept to manage the accounting process for non-current assets, retirement and employee benefits and do not represent usable resources for the Council – these reserves are explained in the relevant properties.

u) REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE

Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of fixed assets has been charged as

expenditure to the relevant service revenue account in the year. Where the Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer to the Capital Adjustment Account then

reverses out the amounts charged in the Movement in Reserves Statement so there is no impact on the level of Council Tax.

v) VALUE ADDED TAX

VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s Revenue & Customs. VAT receivable is excluded

from income.

w) REDEMPTION OF DEBT

The policy regarding debt redemption is only to redeem debt when, taking into account all circumstances regarding current and potential future borrowing

controls, and Housing Subsidy, it is economic and viable to do so. As the Council is currently debt-free, the policy is to use current and future capital receipts in a


prudent manner, and it is not planned to borrow over the period of the Financial Plan.

x) DEBTORS AND CREDITORS

The revenue accounts for the Council are maintained on an accruals basis in accordance with the Code of Accounting Practice and standard accounting

practice. That is, sums due to or from the Council during the year are included whether or not the cash has actually been received or paid in the year.

An exception to this principle relates to electricity and similar quarterly payments which are charged at the date of the meter reading rather than being

apportioned between financial years. This policy is consistently applied each year and therefore does not have a material effect on the year's accounts.

Internal Debtors are netted against internal Creditors on consolidation.

y) MINIMUM REVENUE PROVISION

The Minimum Revenue Provision (MRP) is a statutory charge relating to the

repayment of debt. It represents the Council’s underlying need to borrow for capital expenditure. There is a general duty upon the Council to make an amount of MRP which it considers ‘prudent’.

The Council has no borrowing, but has identified that it has three contractual

arrangements that are classified as finance leases under the requirements of IFRIC 4. The repayments under these leases therefore need to be treated as a borrowing arrangement. The MRP amount that is set aside is equivalent to the

value of the annual principal repayments on the contracts .


2 - CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complex transactions or those involving

uncertainty about future events. The critical judgements made in the Statement of Accounts are:

• A comprehensive review of all property leases has been undertaken to determine whether they should be classified as an operating lease (which

are off-Balance Sheet), or a finance lease (which is on-Balance Sheet). The result of this review was that the Council currently has no property leases which need to be classified as finance leases.

• A further review of service contracts was also undertaken in accordance

with the requirements of IFRIC 4 to determine whether any of the contractual arrangements contain the substance of a finance lease. It was determined that the refuse collection and park & ride contracts were

classified as containing finance leases for the vehicles involved in the delivery of the service, and these have now been included with Property,

Plant & Equipment on the Balance Sheet.

• It has been determined that an arrangement between the Council and the

managing contractor of the Leisure Centre is classified as a service concession arrangement. Under the terms of the arrangement the Council

makes regular payments over a 15 year period to cover the costs of major refurbishment works which have been undertaken by the contractor.

• A review of the Council’s property portfolio has been undertaken to determine which assets should be classified as Investment Properties.

These are those assets held solely to generate rental income or which are held for capital appreciation. A number of assets were classified under this heading, which is shown on the face of the Balance Sheet.

• A review was undertaken to identify what assets the Council owns could

potentially be classified as Heritage Assets. Once a list had been established it was determined which of these met the criteria to be classified as a Heritage Asset, and a further judgement was required to

determine the appropriate basis for valuation, or whether details of the asset should be disclosed in the note only.


3 - ASSUMPTIONS MADE ABOUT THE FUTURE & OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY

The Statement of Accounts contains estimated figures that are based on

assumptions made by the Council about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be

determined with certainty, actual results could be materially different from the assumptions and estimates.

The items in the Council’s Balance Sheet at 31st March 2013 for which there is a significant risk of material adjustment in the forthcoming year are as follows:

Property, Plant & Equipment

Uncertainties:

Assets are depreciated over useful lives that are dependent upon assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the

Council will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to the assets.

Effect if actual results differ from assumptions:

If the useful life of assets is reduced depreciation increases and the carrying amount of the asset falls. It is estimated that the annual depreciation charge for buildings would increase by £20,000 for every year that useful lives had to be

reduced.

Pensions Liability

Uncertainties:

Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are

projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. A firm of consulting actuaries (Barnett

Waddingham) is engaged to provide the Council with expert advice about the assumptions to be applied.


The effect on the net pensions liability of changes in individual assumptions can be measured. For instance, a 0.5% increase in the discount rate assumption would result in a decrease in the pension liability of £12.605m. However, the

assumptions interact in complex ways. A one year decrease in the mortality age rating assumption would result in an increase to the pension liability of £4.786m.


Arrears

Uncertainties:

At 31st March 2013 the Council had a balance of sundry debtors for £14.096m. A

review of significant balances suggested that a provision of doubtful debts for £2.632m was appropriate. However, in the current economic climate it is not

certain that such an allowance would be sufficient.


If collection rates were to deteriorate, a doubling of the amount of the

impairment of doubtful debts would require an additional £1.3m to set aside as an allowance.

Financial Instruments

Uncertainties:

The Council has a number of strategies for managing interest rate risk. The

Annual Treasury Management Strategy draws together Council’s prudential and treasury indicators and its expected treasury operations, including an expectation of interest rate movements. From this Strategy a treasury indicator

is set which provides maximum limits for fixed and variable interest rate exposure.


Current income for the year on the Council’s investments was £0.316m. If interest rates had been 1% higher then the interest receivable upon its variable

rate investments would have been £140,000 more. If the rates were 1% less this would be reversed.


4 - ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT HAVE NOT YET BEEN ADOPTED

International Accounting Standard 8 requires the Council to disclose the

expected impact of new standards that have been issued, but not yet adopted.

There are two standards that are likely to apply to the Council is as follows:

• IAS 19 – Employee Benefits: These are disclosures, relating to the Council’s specific circumstances, explaining that there are new classes of

components of defined benefit cost to be recognised in the financial statements.

• IFRS 7 – Financial Instruments Disclosures: Offsetting Financial Assets

and Liabilities. This may require a change in the accounting policy, which

if the impact was material would need to be disclosed.

5 - ADJUSTMENTS BETWEEN ACCOUNTING BASIS & FUNDING BASIS UNDER REGULATIONS

This note details the adjustments that are made to total comprehensive income

and expenditure recognised by the Council in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Council to meet future capital and revenue expenditure.


2011/12 2012/13

General Fund

Balance

Capital

Receipts

Reserve

Capital

Grants

Unapplied

Movement in

Unusable

Reserves

General Fund

Balance

Capital

Receipts

Reserve

Capital

Grants

Unapplied

Movement in

Unusable

Reserves

£000 £000 £000 £000 £000 £000 £000 £000

Adjustments primarily involving the Capital Adjustment Account

Reversal of items debited or credited to the Comprehensive Income & Expenditure

Statement:

2,483 2,483 Charges for depreciation and impairment of non-current assets 2,588 2,588

296 296 Revaluation (gains)/losses on Property, Plant & Equipment 17 17

550 550 Revaluation (gains)/losses on Investment Properties 0

2,030 2,030 Movement in the market value of Investment Properties (98) (98)

183 183 Amortisation of intangible assets 251 251

(2,592) (2,592) Capital grants and contributions applied (2,384) (2,384)

4,087 4,087 Revenue expenditure funded from capital expenditure under statute 3,328 3,328

Write-off Non-enhancing Capital Expenditure 277 277

Asset Register Adjustments 194 194

0

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on

disposal to the Comprehensive Income & Expenditure Statement (4,098) (4,098)

Insertion of items not debited or credited to the Comprehensive Income &

Expenditure Statement

(935) (935) Statutory provision for the financing of capital investment (948) (948)

(2,559) (2,559) Capital expenditure charged against the General Fund balance 0

Adjustments primarily involving the Capital Grants Unapplied Account

(40) 40 0

Capital grants & contributions unapplied credited to the Comprehensive Income &

Expenditure Statement (539) 539 0

Adjustments primarily involving the Capital Receipts Reserve

(359) 1,121 762

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the

Comprehensive Income & Expenditure Statement 3,608 3,612 7,220

(2,500) (2,500) Use of the Capital Receipts Reserve to finance new capital expenditure (2,624) (2,624)

12 (12) 0 Ctbn.from the Cap.Receipts Res.to finance payments to the Govt. Capital Receipts Pool

22 (22) 0 Contribution from the Capital Receipts Reserve towards administrative costs of non-current 0

Adjustments primarily involving the Deferred Capital Receipts Reserve

0

Transfer of deferred sale proceeds credited as part of the gain/loss on disposal to the

Comprehensive Income & Expenditure Statement 0

Adjustments primarily involving the Pensions Reserve

2,296 2,296

Reversal of items relating to retirement benefits debited or credited to the Comprehensive

Income & Expenditure Statement 3,688 3,688

(2,674) (2,674) Employer's pensions contributions and direct payments to pensioners payable in the year (2,756) (2,756)

Adjustments primarily involving the Collection Fund Adjustment Account

0

Amount by which council tax income credited to the Comprehensive Income & Expenditure

Statement is different from council tax income calculated for the year in accordance with

statutory requirements 0

Adjustments primarily involving the Accumulated Absences Account

(5) (5)

Amount by which officer remuneration charged to the Comprehensive Income & Expenditure

Statement on an accruals basis is different from remuneration chargeable in the year in

accordance with statutory requirements 56 56

2,795 (1,413) 40 1,422 Total Adjustments 3,184 988 539 4,711


6 - MATERIAL ITEMS OF INCOME & EXPENSE

Within the Comprehensive Income & Expenditure Statement are the following material items:

Income:

• Recognition of capital grants received - £2.384m *

Expense

• Revenue Expenditure Funded by Capital Under Statute (Renovation

Grants) - £2.280m * • Revenue Expenditure Funded by Capital Under Statute (Social Housing

Grants) - £1.048m *

* These entries are required under the IFRS Code of Practice to be charged to revenue in the first instance. However, they are subsequently reversed out

through the Movement in Reserves Statement to ensure that they do not impact upon the bottom line of the General Fund.

7 - OTHER OPERATING EXPENDITURE

These are corporate items of income and expenditure that cannot reasonably be

allocated or apportioned to services.

2012/13

2011/12

(Restated)

£000 £000

Parish Council precepts 1,116 1,044

Levies 105 110

Payments to the Government Housing

Capital Receipts Pool 0 12

Miscellaneous Income 0 (42)

Gains/losses on the disposal of non-current

assets (490) (579)

731 545

The only levy due is to the Upper Medway Internal Drainage Board. This is not a new payment, but has previously been included in Net Cost of Services within

the Comprehensive Income & Expenditure Statement. The 2011/12 figures have been restated to reflect the correct classification.


8 - FINANCING AND INVESTMENT INCOME & EXPENDITURE

These are corporate items of income and expenditure arising from the Council’s

involvement in financial instruments and similar transactions involving interest and investment properties.

2012/13 2011/12

£000 £000

Interest payable and similar charges 384 414

Pensions interest cost & expected return on

pensions assets 1,289 697

Interest receivable and similar income (402) (316)

Income & Expenditure in relation to

investment properties and changes in their

fair value (457) 1,966

814 2,761

9 - TAXATION & NON-SPECIFIC GRANT INCOMES

This note consolidates all the grants and contributions receivable that cannot be identified to particular service expenditure. However, all capital grants and

contributions are shown in this note, whether they are service specific or not.

2012/13 2011/12

£000 £000

Council tax income 14,748 14,470

NNDR Redistribution 5,924 4,951

Non-ringfenced Government Grants 2,098 0

Capital grants & contributions 2,069 2,633

24,838 22,054

10 - AMOUNTS REPORTED FOR RESOURCE ALLOCATION DECISIONS

The analysis of income and expenditure by service on the face of the Comprehensive Income & Expenditure Statement is that specified by the Best

Value Accounting Code of Practice. However, decisions about resource allocation are taken by the Council’s Cabinet on the basis of budget reports analysed across Cabinet Member portfolios.

The income and expenditure of the individual Member portfolios recorded in

budget reports is as follows:


Portfolio Holder Income &

Expenditure 2012/13 Leader of th

e

Council

Com

munity &

Leisure

Corp

ora

te

Serv

ices

Econom

ic

Develo

pm

ent

& T

ransport

Environm

ent

Tota

l

£000 £000 £000 £000 £000 £000

Fees, charges & other service income (83) (1,262) (1,676) (3,646) (5,787) (12,454)

Government Grants (66) (447) (56,138) 0 (9) (56,660)

Total income (149) (1,709) (57,814) (3,646) (5,796) (69,114)

Employee expenses 794 1,584 7,496 2,053 3,841 15,768

Other service expenses 753 7,068 61,638 5,177 9,568 84,204

Support service recharges 713 346 (7,263) 1,329 (1,985) (6,860)

Total expenditure 2,260 8,998 61,871 8,559 11,424 93,112

Net Expenditure 2,111 7,289 4,057 4,913 5,628 23,998

Portfolio Holder Income &

Expenditure 2011/12 comparative

figures (Restated) Leader of th

e

Council

Com

munity &

Leisure

Corp

ora

te

Serv

ices

Econom

ic

Develo

pm

ent

& T

ransport

Environm

ent

Tota

l

£000 £000 £000 £000 £000 £000 £000

Fees, charges & other service income (804) (862) (1,305) (4,238) (5,206) (12,415)

Government Grants (1,076) (75) (53,162) (34) (47) (54,394)

Total income (1,880) (937) (54,467) (4,272) (5,253) (66,809)

Employee expenses 1,047 1,835 6,341 2,300 3,963 15,486

Other service expenses 854 3,114 58,901 10,663 10,749 84,281

Support service recharges 572 8 (8,073) 1,270 (3,826) (10,049)

Total expenditure 2,473 4,957 57,169 14,233 10,886 89,718

Net Expenditure 593 4,020 2,702 9,961 5,633 22,909

Reconciliation of Portfolio Holder Income & Expenditure to Cost of

Services in the Comprehensive Income & Expenditure Statement

This reconciliation shows how the figures in the analysis of portfolio holder

income and expenditure relate to the amounts included in the Comprehensive Income & Expenditure Statement.

2012/13 2011/12

£000 £000

Net Expenditure in Portfolio Analysis 23,998 22,909

Amounts reported below the line on

the Net Cost of Services 0 0

Cost of services in

Comprehensive Income &

Expenditure Statement 23,998 22,909


Reconciliation to Subjective Analysis

This reconciliation shows how the figures in the analysis of portfolio holder

income and expenditure relate to a subjective analysis of the Surplus or Deficit on the Provision of Services included in the Comprehensive Income &

Expenditure Statement.

2012/13 Portfo

lio

hold

er

analy

sis

Belo

w the lin

e

on N

et Cost of

Serv

ices

Net Cost of

Serv

ices

Corp

ora

te

Am

ounts

Tota

l

£000 £000 £000 £000 £000

Fees, charges & other service income (12,454) (12,454) (12,454)

Interest & investment income 0 (402) (402)

Income from council tax 0 (14,748) (14,748)

Government grants and contributions (56,660) (56,660) (10,090) (66,750)

Total Income (69,114) 0 (69,114) (25,240) (94,354)

Employee expenses 15,768 15,768 1,289 17,057

Other service expenses 84,204 84,204 (457) 83,747

Support Service recharges (6,860) (6,860) (6,860)

Depreciation, amortisation and impairment 0 0

Interest Payments 0 384 384

Precepts & Levies 0 1,220 1,220

Payments to Housing Capital Receipts Pool 0 0

Gain or Loss on Disposal of Fixed Assets 0 (490) (490)

Total Expenditure 93,112 0 93,112 1,946 95,058

Surplus or deficit on the provision of services 23,998 0 23,998 (23,293) 705

2011/12 comparative figures Portfo

lio

hold

er

analy

sis

Belo

w the lin

e

on N

et Cost of

Serv

ices

Net Cost of

Serv

ices

Corp

ora

te

Am

ounts

Tota

l

(Restated) £000 £000 £000 £000 £000

Fees, charges & other service income (12,415) (12,415) (12,415)

Interest & investment income 0 (316) (316)

Income from council tax 0 (14,470) (14,470)

Government grants and contributions (54,394) (54,394) (9,115) (63,509)

Total Income (66,809) 0 (66,809) (23,901) (90,710)

Employee expenses 15,486 15,486 697 16,183

Other service expenses 84,281 84,281 1,924 86,205

Support Service recharges (10,049) (10,049) (10,049)

Depreciation, amortisation and impairment 0 0

Interest Payments 0 414 414

Precepts & Levies 0 1,154 1,154

Payments to Housing Capital Receipts Pool 0 12 12

Gain or Loss on Disposal of Fixed Assets 0 (579) (579)

Total Expenditure 89,718 0 89,718 3,622 93,340

Surplus or deficit on the provision of services 22,909 0 22,909 (20,279) 2,630

2011/12 has been restated to reflect the inclusion of the Upper Medway Internal Drainage Board Levy in Other Operating Expenditure.


11 - TRADING OPERATIONS

The Council has established 8 trading units where the service manager is

required to operate in a commercial environment and balance their budget by generating income from other parts of the Council or other organisations. Details

of those units are as follows:

2012/13 2011/12

Operation £000 £000 £000 £000

Market Turnover 323 649

Expenditure 383 520

Surplus/(Deficit) (60) 129

Parkwood Industrial Estate Turnover 392 363

Expenditure 28 36

Surplus/(Deficit) 364 327

Pay & Display Car Parking Turnover 1,539 1,649

Expenditure 606 798


On-street Car Parking Turnover 703 598

Expenditure 512 558


Consolidated result of Turnover 1,732 3,287

remaining trading units Expenditure 1,732 3,287


Net surplus/(Deficit) on trading operations 1,428 1,346

12 - MEMBERS’ ALLOWANCES

The total sum of Members Allowances paid during 2012/13 totalled £384,617. (£375,922 in 2011/12).

The Council also produce a statement, in accordance with provision 1021 – 15(3) of the Local Authorities (Members Allowance) (England) Regulations 2003,

giving details of allowances paid to Members for the year. This can be viewed on the Council’s website:

http://www.maidstone.gov.uk/council/councillors/councillor-allowances


13 - OFFICERS’ REMUNERATION

The remuneration paid to the Council’s senior employees is as follows:

2012/13 Sala

ry (in

clu

din

g

Fees &

Allow

ances)

Benefits

in K

ind

(e.g

.Car Allow

ance)

Tota

l Rem

unera

tion

exclu

din

g P

ensio

n

Contrib

utions

Pensio

n

Contrib

utions

Tota

l Rem

unera

tion

inclu

din

g P

ensio

n

Contrib

utions

£000 £000 £000 £000 £000

Chief Executive 111 13 124 15 139

Director of Change, Planning & the Environment 96 4 100 13 113

Director of Regeneration & Communities 96 4 100 13 113

Head of Human Resources 80 9 89 11 100

Head of Audit & Risk Strategy 67 7 74 9 84

Head of Communications 66 7 73 9 82

Head of Legal Services 66 4 70 9 79

Overview & Scrutiny Manager 57 6 63 8 71

2011/12 Sala

ry (in

clu

din

g

Fees &

Allow

ances)

Benefits

in K

ind

(e.g

.Car

Allow

ance)

Tota

l

Rem

unera

tion

exclu

din

g

Pensio

n

Contrib

utions

Pensio

n

Contrib

utions

Tota

l

Rem

unera

tion

inclu

din

g P

ensio

n

Contrib

utions

£000 £000 £000 £000 £000

Chief Executive 106 16 122 14 136

Director of Change, Planning & the Environment 94 5 99 13 112

Director of Regeneration & Communities 94 4 98 13 111

Head of Human Resources 80 10 90 10 100

Head of Communications 66 7 73 9 82

Head of Audit & Risk Strategy 65 7 72 9 81

Head of Legal Services 66 4 70 9 79

Overview & Scrutiny Manager 48 5 53 7 60

Senior Officers are defined as those who sit on the Corporate Leadership Team, and those who report directly to the Chief Executive and receive more than

£50,000 remuneration for the year.

The Head of Human Resources and the Head of Audit & Risk Strategy both

manage shared services for which Maidstone receives income from the partner authorities to cover the costs of these posts.

The Council’s other employees receiving more than £50,000 remuneration for the year (excluding employer’s pension contributions) were paid the following

amounts:


2012/13 2011/12

Remuneration Band

No.of

employees

No.of

employees

£50,000 - £54,999 4 5

£55,000 - £59,999 2 4

£60,000 - £64,999 4 2

£65,000 - £69,999 2 3

£70,000 - £74,999 1 0

£75,000 - £79,999 1 2

£80,000 - £84,999 0 0

£85,000 - £89,999 0 1

£90,000 - £94,999 1 0

Exit Packages

The number of exit packages with total cost per band and the total cost of the

compulsory and other redundancies are set out in the table below:

Exit Package Cost

Band (including

special payments)

2012/13 2011/12 2012/13 2011/12 2012/13 2011/12 2012/13 2011/12

£000 £000

£0 - £20,000 0 0 9 28 9 28 42 205

£20,001 - £40,000 0 0 0 2 0 2 0 52

£40,001 - £60,000 0 0 0 2 0 2 0 106

£60,001 - £80,000 0 0 0 1 0 1 0 64

£80,001 - £100,000 0 0 0 0 0 0 0 0

£100,001 - £150,000 0 0 0 1 0 1 0 104

Total 0 0 9 34 9 34 42 532

Number of

compulsory

redundancies

Number of other

departures agreed

Total number of exit

packages by cost

band

Total cost of exit

packages in each

band

14 - EXTERNAL AUDIT COSTS

The Council has incurred the following costs in relation to the audit of the Statement of Accounts, certification of grant claims and statutory inspections and to non-audit services provided the Council’s external auditors, who are the

Audit Commission.

2012/13 2011/12

£000 £000

Fees payable with regard to external

audit services carried out by the

appointed auditor for the year 83 111

Fees payable for the certification of grant

claims and returns during the year 21 29

Fees payable in respect of other services

provided during the year 0 0Total 104 140


15 - GRANT INCOME

The Council has credited the following grants, contributions and donations to the

Comprehensive Income & Expenditure Statement in 2012/13:

Credited to Taxation & Non Specific

Grant Income 2012/13 2011/12

£000 £000

Council tax income 14,748 14,470

NNDR Redistribution 5,924 4,951

Non-ringfenced Government Grants 2,098

Capital grants & contributions 2,068 2,633

Total 24,838 22,054

Credited to Services

Housing Benefit Subsidy 44,573 41,610

Council Tax Benefits 10,727 10,829

Non-Domestic Rates - Cost of Collection 207 205

Housing & Planning Delivery Grant 0 1,038

Homelessness Prevention 182 0

Mortgage Rescue Programme 173 0

New Homes Bonus 85 0

Other Grants 713 530

Total 56,660 54,212

The Council has received a number of grants, contributions and donations that have yet to be recognised as income as they have conditions attached to them

that will require the monies or property to be returned to the giver. The balances at the year-end are as follows:

31st

March

2013

31st

March

2012

Capital Grants Receipts in Advance £000 £000

Section 106 Contributions 1,531 1,545

Other Contributions 53 54

Total 1,584 1,599


16 - RELATED PARTIES

The Council is required to disclose material transactions with related parties –

bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions

allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the

ability to limit another party’s ability to bargain freely with the Council.

Central Government

Central government has effective control over the general operations of the Council- it is responsible for providing the statutory framework within which the

Council operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Council has with other

parties (e.g. council tax bills, housing benefits). Grants received from government departments are set out in the subjective analysis in Note 10 on reporting for resources allocation decisions.

Members and Senior Officers

Members of the Council have direct control over the Council’s financial and operating policies. The total of Members’ Allowances paid in 2012/13 is shown in

Note 12.

All Members and Senior Officers were required to complete a declaration of

interests that included details of any finance-related transactions with the Council. Two Members made declarations of significance - one is a shareholder

of a pest control company that had transactions to the value of £8,851 with the Council, and another is the Managing Director of a stonemasons company that had transactions to the value of £20,412 with the Council.


17 - PROPERTY, PLANT & EQUIPMENT

Movements on Balances

Movements in 2012/13 Infrastructu

re

Assets

Land &

Buildin

gs

Pla

nt,

Machin

ery

&

Equip

ment

Vehicles

IT &

Office

Equip

ment

Com

munity

Assets

Assets

Under

Construction

Tota

l

Pro

perty,

Pla

nt &

Equip

ment

£000 £000 £000 £000 £000 £000 £000 £000

Cost or Valuations

At 1st April 2012 5,868 47,005 10,181 4,039 4,337 2,110 30 73,570

Additions 65 264 51 0 (12) 946 27 1,341

Revaluation increases/(decreases) recognised in

the Revalution Reserve 0 637 0 0 0 0 0 637


the Surplus/Deficit on the Provision of Services (46) 0 (46)

Assets Reclassified (140) 0 140 0

Other movements in cost or valuation 0 (938) (38) 0 25 (98) (55) (1,104) At 31st March 2013 5,933 46,782 10,194 4,039 4,350 3,098 2 74,398

Accumulated Depreciation & Impairment

At 1st April 2012 (3,144) (1,724) (2,027) (3,047) (1,526) 0 0 (11,468)

Depreciation charge (282) (886) (541) (597) (282) 0 0 (2,588)

Depreciation written out to the Revaluation Reserve 444 444

Depreciation written out to the Surplus/Deficit on

the Provision of Services 29 29 At 31st March 2013 (3,426) (2,137) (2,568) (3,644) (1,808) 0 0 (13,583)

Net Book Value

At 31st March 2013 2,507 44,645 7,625 395 2,542 3,098 2 60,815

At 31st March 2012 2,723 45,282 8,350 990 2,812 2,111 30 62,298


Comparative Movements in

2011/12 Infrastructu

re

Assets

Land &

Buildin

gs

Pla

nt,

Machin

ery

&

Equip

ment

Vehicle

s

IT &

Office

Equip

ment

Com

munity

Assets

Assets

Under

Construction

Tota

l

Pro

perty,

Pla

nt &

Equip

ment

(Restated) £000 £000 £000 £000 £000 £000 £000 £000

Cost or Valuations

At 1st April 2011 5,855 51,183 5,538 4,023 4,225 776 0 71,600

Additions 13 1,439 413 16 112 1,413 30 3,436


the Revaluation Reserve 0 (70) 0 0 0 0 0 (70)


Surplus/Deficit on the Provision of Services 0 (316) 0 0 0 (15) 0 (331)

Assets Reclassified (to)/from Assets Held for Sale 0 (10) 0 0 0 0 0 (10)

Other movements in cost or valuation 0 (5,220) 4,231 0 0 (63) 0 (1,052)

At 31st March 2012 5,868 47,006 10,182 4,039 4,337 2,111 30 73,573

Accumulated Depreciation & Impairment

At 1st April 2011 (2,861) (1,470) (1,357) (2,455) (1,159) 0 0 (9,302)

Depreciation charge (284) (871) (369) (594) (366) 0 0 (2,484)

Depreciation written out to the Revaluation Reserve 0 300 0 0 0 0 0 300

Depreciation written out to the Surplus/Deficit on

the Provision of Services 0 142 0 0 0 0 0 142

Other movements in depreciation or impairment 0 175 (106) 0 0 0 0 69

At 31st March 2012 (3,145) (1,724) (1,832) (3,049) (1,525) 0 0 (11,275)

Net Book Value

At 31st March 2012 2,723 45,282 8,350 990 2,812 2,111 30 62,298


In line with the requirement to account for significant component elements of Property, Plant & Equipment the value for of the cremator equipment (£1.297m)

has been transferred from the value of the crematorium in Land & Buildings and moved to Plant, Machinery & Equipment. A balance for accumulated depreciation

has also been established. The figures for 2011/12 have been restated to reflect this.

Community Assets have all previously been revalued at £1 each, in accordance with Note 2. The Code of Practice on Local Authority Accounting requires

Community Assets to be recorded on the Balance Sheet at Historic Cost. Due to the age and nature of many of the Community Assets it is not possible to ascertain an accurate historical cost, but expenditure incurred is now added to

the value of the asset. Any expenditure on Community Assets was previously written off as Revenue Expenditure charged to Capital

under Statute.

Depreciation

The following useful lives and depreciation rates have been used in the

calculation of depreciation:

• Buildings – straight-line allocation over the useful life of the property as

estimated by a suitably qualified officer.

• Vehicles, Plant, Furniture, IT & Office Equipment – straight-line allocation over the useful life of the asset as estimated by a suitably qualified officer.

• Infrastructure - straight-line allocation over 20 years.

Capital Commitments

At 31st March 2013 the Council has only entered into one contract in 2013/14 and future years, budgeted to cost £1.362m, for Phase 2 of the High Street Regeneration Scheme. Similar commitments at 31st March 2012 were £1.154m.

Revaluations

The Council carries out a rolling programme that ensures that all Property, Plant & Equipment required to be measured at fair value is revalued at least every 5

years. All valuations were carried out externally by Harrison’s Chartered Surveyors. Valuations of land and buildings were carried out in accordance with

the methodologies and bases for estimation set out in the professional standards of RICS. The latest revaluations were carried out as at 1st April 2012.

The table also shows the historic cost values of the various asset classes, which were established at 1st April 2007 when the current capital accounting requirements came into force.


Infrastructu

re

Assets

Com

munity

Assets

Land &

Buildin

gs

Pla

nt,

Machin

ery

&

Equip

ment

Vehicle

s

IT &

Office

Equip

ment

Assets

Under

Construction

Tota

l

£000 £000 £000 £000 £000 £000 £000 £000

Carried at historical cost 2,507 3,098 357 7,625 395 2,542 2 16,527

Valued at fair value as at:

31st March 2009 1,865 1,865

31st March 2010 32,676 32,676

31st March 2011 440 440

31st March 2012 7,400 7,400

31st March 2013 1,907 1,907

Total Cost or Valuation 2,507 3,098 44,645 7,625 395 2,542 2 60,815

18 - INVESTMENT PROPERTIES

The following items of income and expense have been accounted for in the

Financing and Investment Income & Expenditure line in the Comprehensive Income & Expenditure Statement:

2012/13 2011/12

£000 £000

Rental income from investment property (735) (649)

Direct operating expenses arising from

investment property 377 341

Net (gain)/loss (358) (308)

The Council’s investment properties are held under operating leases following an assessment of the terms of the individual leases. There are no restrictions on the

Council’s ability to realise the value inherent in it investment property or on the Council’s right to the remittance of income and the proceeds of disposal. The Council has no contractual obligations to purchase, construct or develop

investment property or repairs, maintenance or enhancement.

The following table summarises the movement in the fair value of investment properties over the year:


2012/13 2011/12

£000 £000

Balance at start of the year 12,469 14,917

Additions:

Transfers from Property, Plant & Equipment 299

Disposals (480)

Net gains/losses from fair value adjustments 98 (2,267)

Other changes

Balance at end of year 12,567 12,469

19 – HERITAGE ASSETS: 5 YEAR SUMMARY OF TRANSACTIONS

2008/09 2009/10 2010/11 2011/12 2012/13

£000 £000 £000 £000 £000

Balance Brought Forward 10,090 10,160 10,245 10,279 10,279

Acquisitions 70 84 34 55

Disposals

Balance Carried Forward 10,160 10,245 10,279 10,279 10,334

20 – HERITAGE ASSETS: RECONCILIATION OF THE CARRYING VALUE HELD BY THE COUNCIL

Museum

Exhibits

War

Memorials

Statues &

Sculptures

Other

Items

Total

Assets

Cost or Valuation £000 £000 £000 £000 £000

1st April 2011 9,090 450 460 279 10,279

Additions 0

Disposals 0

Revaluations 0

Impairment Losses 0

Depreciation 0

31st March 2012 9,090 450 460 279 10,279

1st April 2012 9,090 450 460 279 10,279

Additions 55 55

Disposals 0

Revaluations 0

Impairment Losses 0

Depreciation 0

31st March 2013 9,090 450 515 279 10,334


Museum Exhibits

The exhibits are held in two main locations, the Maidstone Museum & Bentlif Art Gallery, and the Carriage Museum. Further information on the museums and

their collections can be seen on their dedicated website:

http://www.museum.maidstone.gov.uk/

Maidstone Museum has recently been the subject of a major refurbishment, including the creation of a new extension to the Museum, which has recently

opened. This has extended the amount of the collection that is on view to the public, and has also improved the storage facilities for the remainder of the

collection.

Included within the total value of £9.090m are a number of significant items:

• A copy of a Lambeth Bible valued at £1m

• A number of Japanese woodblock prints valued in total at £1.2m • A number of Japanese Inro exhibits valued in total at £0.6m

The total of £9.090m represents those items that have formally been valued for insurance purposes by a number of reputable auction houses. The value of the total collection is likely to be far higher, and is valued for insurance purposes at

£17.5m (which includes items on loan to the Council, and those held in Trust at the Museum), but it is considered that it would not be cost-effective or of any

significant benefit to formally value the entire collection.

The museums’ collections are administered with reference to an Acquisition and

Disposal policy approved by the museums’ governing body (the Council). This is a requirement of the Museums, Libraries & Archives Council’s (MLA)

‘Accreditation’ Scheme (now operated by Arts Council England). Its purpose is to review the present state and use of the collections and define how artefacts and specimens enter and leave the collections. It ensures material is accepted

according to a recognized strategy, serves as a reference document to guide curatorial decisions and encourages public confidence in the Museum as a

suitable repository. It covers the recording of artefacts and specimens and through its use determines how widely the collections can be accessed by the general public (e.g. digitisation of the records will enable remote access to the

collections via the Internet).

War Memorials

The Council is responsible for two war memorials, one in the Broadway and the

other in Brenchley Gardens. A local stone mason has provided a replacement value for the two memorials. Upkeep and maintenance of the memorials is the

responsibility of the Council’s Property Services section.

Statues and Sculptures

There are a number of statues and sculptures throughout the borough that the Council are responsible for. These are in a number of locations, and have been

valued at their purchase cost, where this is known, although none of them individually have a significant value.


Other Items

This relates to two items, the civic regalia used by the Mayor, and the ‘Elemental’ art installation on the bridge across the River Medway. The civic

regalia has been valued by a local jeweller for insurance purposes, and the art installation has been valued at purchase cost.

Listed Buildings and Other Heritage Assets

The Old College complex, comprising the Gateway, the Masters Tower and the

Quarterdeck has been classified as a heritage asset. However due to the age and nature of the buildings it would not be possible to ascertain a true and accurate

valuation.

In addition the Council owns a number of other assets. These have not been

valued as it would not be cost-effective in terms of time and financial resources to do so. These include the balance of the museum exhibits referenced earlier in

this note, and the following assets:

• Finial to the Commons Debating Chamber in Brenchley Gardens

• Daphne & Apollo statue in Brenchley Gardens • Clare Park Drinking Fountain

• Penenden Heath Clock Tower • South Park Fountain • Queen’s Monument in Jubilee Square

• The Cannon in the Lower High Street • Dove of Peace sculpture in the Archbishop’s Palace Gardens

21 - INTANGIBLE ASSETS

The Council accounts for its software as intangible assets, to the extent that software is not an integral part of a particular IT system and accounted for as

part of the hardware item of Property, Plant & Equipment. The intangible assets primarily cover purchased licences.

The carrying amount of intangible assets is amortised on a straight-line basis over 3 or 5 years. The amortisation of £0.251m charged to revenue in 2012/13

was charged to the IT Administration cost centre (included in Central Services to the Public) and the absorbed as an overhead across all the service headings in

the Net Expenditure of Services. It is not possible to quantify how much of the amortisation is attributable to each service heading.

The movement on Intangible Asset balances during the year is as follows:


2012/13 2011/12

£000 £000

Balance at start of year:

Gross carrying amount 1,700 1,403

Accumulated amortisation (1,128) (945)

Net carrying amount at start of year 572 458

Additions 342 297

Amortisation for the period (251) (183)

Net carrying amount at end of year 663 572

22 - FINANCIAL INSTRUMENTS

Categories of Financial Instruments

The following categories of financial instrument are carried in the Balance Sheet:

Long-term Short-Term

31st March

2013

31st March

2012

31st March

2013

31st March

2012

£000 £000 £000 £000

Investments

Loans & receivables 13,520 13,797

Available-for-sale financial assets 11 11 0

11 11 13,520 13,797

Bank Overdraft 77

Debtors

Loans & receivables 30 34 5,453 8,668

Creditors

Financial liabilities at amortised cost 5,174 5,019

Other Long Term Liabilities

Finance Lease Liabilities 0 0 0 994

On the face of the Balance Sheet Loans & Receivables are split in Current Assets

between Short Term Investments and Cash & Cash Equivalents.

The current financial liabilities are all due to be settled within one year.


Income & Expense

31st March

2013

31st March

2012

31st March

2013

31st March

2012

£000 £000 £000 £000

Income:

Loans & Receivables 0 389 312

Available-for-sale Financial Assets 0 0

Other Interest 0 2 4

Total 0 0 391 316

Short TermLong-Term

Fair Value of Assets and Liabilities

Financial liabilities, financial assets represented by loans and receivables and long-term debtors and creditors are carried in the Balance Sheet at amortised

cost. Where an instrument has a maturity of less than 12 months the fair value is taken to be the carrying amount. The Council has no loans or long-term

creditors, and the fair value of trade and other receivables is taken to be the invoiced or billed amount.

23 - NATURE & EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS

The authority’s activities expose it to a variety of financial risks:

• Credit risk – the possibility that other parties might fail to pay amounts

due to the authority.

• Liquidity risk – the possibility that the authority might not have funds available to meet its commitments to make payments.

• Refinancing risk - the possibility the authority might be requiring to renew a financial instrument on maturity at a disadvantageous interest rate or

terms.

• Market risk – the possibility that financial loss might arise for the authority as a result of changes in such measures as interest rates.

The authority’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse

effects on the resources available to fund services. Risk management is carried out by the Head of Finance & Customer Services and the Treasury Management

Accountant, under policies approved by the Council on 2nd March 2011 in the Annual Treasury Management Strategy, which can be viewed on the Council’s

website – http://www.maidstone.gov.uk. A summary of the main points of the 2012/13 Treasury Management Strategy is also shown below.


The Council also provides written principles for overall risk management, as well as written policies covering specific areas such as interest rate risk, credit risk

and the investment of surplus cash. These are set out in the Council’s Treasury Management Practices, which are requirement of CIPFA’s Treasury Management

Code of Practice, which has been adopted by the Council. Treasury Management indicators have also been set to control key financial instruments risks in accordance with CIPFA’s Prudential Code. The Treasury Management Practices

can also be viewed on the Council’s website, at the above link.

Treasury Management Strategy 2012/13

A summary of the main points of the strategy is as follows:

• Invest funds short term (up to 1 year) so that funds are available to invest if rates increase.

• Up to £3m being invested for 1 year if the funds become available and the rates are favourable.

• No planned borrowing, other than short term cash flow purposes. • Group limits placed on institutions within same ownership group.

Credit Risk

Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the authority’s customers. There are limits based on credit ratings set on the amount and length of time deposits can be made with

individual banks and financial institutions, and these are set out in the Annual Treasury Management Strategy. These ratings are Supplied by Sector (the

Council’s Treasury Advisors), who look at ratings from all three credit rating agencies, Fitch, Moodys and Standard and Poors. However, it does not rely solely on the current credit ratings of counterparties but also uses the following

as overlays:

• credit watches and credit outlooks from credit rating agencies

• CDS spreads to give early warning of likely changes in credit ratings

• sovereign ratings to select counterparties from only the most creditworthy countries

There are no credit limits set on the authority’s customers, as the amounts

involved are not considered sufficiently material to warrant the setting of such limits.

As at 31st March 2013 the investments were held with the following institutions:


31st March

2013

31st March

2012

£000 £000

AAA rated Institutions 0 0

AA rated Institutions 0 0

A rated Institutions 11,520 13,620

Unrated Building Societies 2,000 0

UK Government 11 11

Total 13,531 13,631

Liquidity Risk

Liquidity risk arises from the Council having insufficient resources to meet its

ongoing commitments. The Council has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. If unexpected

movements happen, the Council has ready access to borrowings from the money market and the Public Loans Works Board. There is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments.

Borrowing is generally only undertaken on a short-term basis for cash flow purposes, and there is also an overdraft facility of £0.5m available with Lloyds

TSB Bank. However provision has also been made with the current Treasury Management Strategy to have an authorised debt limit of £8m to fund ongoing schemes in the event of projected capital receipts not being realised.

Refinancing and Maturity Risk

The Council maintains a significant debt and investment portfolio. Whilst the cash flow procedures above are considered against the refinancing risk

procedures, longer-term risk to the Council relates to managing the exposure to replacing financial instruments as they mature. This risk relates to both the maturing of longer term financial liabilities and longer term financial assets.

The approved treasury indicator limits for the maturity structure of debt and the

limits placed on investments placed for greater than one year in duration are the key parameters used to address this risk. The Council approved treasury and

investment strategies address the main risks and the central treasury team address the operational risks within the approved parameters. This includes:

• monitoring the maturity profile of financial liabilities and amending the profile through either new borrowing or the rescheduling of the existing

debt; and

• monitoring the maturity profile of investments to ensure sufficient liquidity is available for the Council’s day to day cash flow needs, and the spread of

longer term investments provide stability of maturities and returns in relation to the longer term cash flow needs.


Market Risk – Interest Rate Risk

As the Council is currently debt-free its only risk is in relation to exposure to interest rate movements in its investments. This exposure is managed by use of

Prudential Indicators, which set limits on the proportion of investments held at fixed and variable rates. These indicators are monitored on a daily basis. The main exposure to risk in this area is the use of investment Call Accounts and

Money Market Funds which are linked to Base Rate. However the risk is considered to be small as these accounts are generally only used for the short-

term investment of funds for cash flow purposes, and funds can be withdrawn on a daily basis. The risk exposure is summarised in the table below.

31st March

2013

31st March

2012

£000 £000

Call Accounts 5,520 1,620

Receivables 8,000 12,000

Available-for-Sale Financial Assets 11 11

Total 13,531 13,631

The Council also makes use of interest rate forecasts and market data and advice provided by its Treasury Management advisors to ensure that investment income is maximised wherever possible.

Foreign Exchange Risk

The Council has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to loss arising from movements in

exchange rates.

24 - ASSETS HELD FOR SALE

All assets held for sale are non-current assets. Assets classified under this heading would normally be expected to be disposed of within a year, as per the

Code of Practice for Local Authority Accounting in the United Kingdom. However, due to the current economic situation the Council has been unable to dispose of these assets for a number of years now. However, they continue to be marketed

with a reasonable expectation of disposal, and at the Balance Sheet date negotiations with prospective buyers were at an advanced stage, therefore it

was considered appropriate to continue to classify them as held for sale.


2012/13 2011/12

£000 £000

Balance outstanding at start of year 3,475 2,264

Assets newly classified as held for sale:

Property, Plant & Equipment 10

Investment Properties

Revaluation gains 1,361

Revaluation losses (150)

Assets sold (2,925) (10)

Balance outstanding at year-end 550 3,475

25 – INVENTORIES

These are materials or supplies that will be consumed in producing goods or

providing services or will be sold or distributed as part of the Council’s ordinary business.

2012/13 2011/12

£000 £000

Stores 102 102

Stamps & Franks 4 1

Total 106 103

26 – DEBTORS

Long Term

2012/13 2011/12

£000 £000

Mortgages 29 33

Housing Act Advances 1 1

Total 30 34


Short Term

2012/13 2011/12

£000 £000

Central government bodies 4,181 1,115

Other local authorities 286 350

Other entities and individuals 7,088 7,009

Total 11,555 8,474

The movement in the balances for Central Government bodies is a reflection of

changes to amounts due from the Government in respect of Housing Benefits.

Other entities and individuals is broken down as follows:

2012/13 2011/12

£000 £000

Council Tax payers 651 1,221

Capital debtors 603 1,094

General debtors 4,221 3,476

Payments in Advance 984 596

Other miscellaneous amounts 629 622

Total 7,088 7,009

27 - CASH & CASH EQUIVALENTS

The balance of Cash & Cash Equivalents is made up of the following elements:

2012/13 2011/12

£000 £000

Cash held by the Council 9 46

Bank current accounts (77) 131

Short-term deposits 6,520 6,620

Total 6,452 6,797

Cash & Cash Equivalents are split on the face of the Balance Sheet between Current Assets and Current Liabilities.


28 – CREDITORS

Short Term

2012/13 2011/12

£000 £000

Central government bodies 762 544

Other local authorities 54 80

Other entities and individuals 6,066 6,614

Total 6,882 7,238

Other entities and individuals is broken down as follows:

2012/13 2011/12

£000 £000

General creditors 3,876 3,390

Capital creditors 575 1,230

Council tax payers 115 179

Receipts in advance 776 1,416

Deposits 572 270

Retentions 152 129

Total 6,066 6,614

29 - PROVISION FOR BAD DEBTS

2012/13 2011/12

£000 £000

Excess Charges Provision 420 384

Sundry Bad Debts Provision 1,561 1,377

Total 1,981 1,761


30 - CAPITAL GRANTS RECEIVED IN ADVANCE

Grants and other contributions given towards the Council’s capital expenditure are retained in this account whilst conditions remain attached to financial

assistance.

2012/13 2011/12

£000 £000

Balance at start of year: 1,599 1,678

Grants Received 2,923 2,513

Transferred to Grants Unapplied (588) 0

Funding used for capital expenditure (2,350) (2,592)

Balance at end of year: 1,584 1,599

31 - TRUST FUNDS

The Council is required to set out details of the nature and amount of trust funds where it acts as sole trustee, the only one of which is the Cobtree Estate Trust. The object of this trust is to hold Cobtree Manor and Cobtree Manor Estate for

the benefit of the inhabitants of Maidstone and other members of the general public.

Gross expenditure in 2012/13 totalled £511,857 (£205,763 in 2011/12). Gross income in 2012/13 totalled £340,795 (£306,740 in 2011/12). The increased

expenditure is due to the construction of the new play area in Cobtree Manor Park.

The assets and liabilities of the Trust as at 31st March 2013 may be summarised as follows:


2012/13 2011/12

£000 £000

Fixed Assets:

Cobtree Golf Course 500 501

Cobtree Manor Park 936 936

Investments 1,527 1,328

2,963 2,765

Current Assets 231 83

Current Liabilities 302 4

Total assets less current liabilities 2,892 2,844

Total Charitable Funds 2,892 2,844

32 - PRIVATE FINANCE INITIATIVES & SIMILAR CONTRACTS

The Council has no Private Finance Initiative Schemes, but the following scheme is a similar contract as it is defined as a service concession arrangement.

The Council entered into an agreement during 2009/10 with Serco, the managing contractor of Maidstone Leisure Centre, to undertake a major

refurbishment of the centre. Under the terms of the agreement Serco have initially funded the cost of the works through a loan, and the Council are then repaying this loan over a 15 year term, by equal monthly instalments. The

principal element of this loan is reflected on the Balance Sheet, and will be written down annually by the amount of principal repaid. Interest paid on the

loan is charged to the Comprehensive Income & Expenditure Statement.

The value of the works carried out to date (£4.073m) has been reflected in the

non-current assets total, with a matching entry shown as a deferred liability (less repayments made in 2012/13) to reflect the balance due on the loan for

the works done to date.

The annual principal repayments are credited to the Comprehensive Income &

Expenditure Statement, then reversed out of the Movement in Reserves Statement to the Capital Adjustment Account to reflect the fact that this is a

repayment of debt, as this arrangement is classed as borrowing under the terms of the CIPFA Prudential Code for Capital.


Payments

2012/13 2011/12

£000 £000

Balance outstanding at start of year 2,955 3,347

Value of capital works 0 0

Repayment of principal (403) (392)

Balance outstanding at end of year 2,552 2,955

These figures are shown on the face of the Balance Sheet as Deferred Liabilities, and are split between the Short Term and Long Term elements.

33 - LEASE TYPE ARRANGEMENTS

Under the terms of IFRIC 4 (Determining Whether an Arrangement Contains a Lease) the Council is required to identify any contractual arrangements that may

include an element that could be classified as a finance lease. It has been established that the vehicles used in the provision of the refuse collection and park & ride contracts need to be classified under this arrangement, and

therefore the value of the assets used are now reflected within the Property, Plant & Equipment heading on the Balance Sheet, as finance leases need to be

shown in this way.

The cost of services within the Comprehensive Income & Expenditure Statement

are charged with a sum that reflects the value of the element of the contract that relates to the vehicles, along with depreciation and financing charges. These

sums are all reversed out in the Movement in Reserves Statement to the Capital Adjustment Account to ensure that there is no impact upon Council Tax.

2012/13 2011/12

£000 £000

Balance outstanding at start of year 845 1,390

Value of assets in use 0 0

Repayment of principal (544) (545)

Balance outstanding at end of year 301 845

These figures are shown on the face of the Balance Sheet as Deferred Liabilities, and are split between the Short Term and Long Term elements.


34 - USABLE RESERVES

Movements in the Council’s usable reserves are detailed in the Movement in

Reserves Statement and the table below:

Capital Receipts Reserve

This reserve contains the proceeds from the sale of non-current assets, which

are used to fund capital expenditure.

31st March

2013

31st March

2012

£000 £000

Balance at 1st April 55 1,468

Capital Receipts Received 3,612 1,099

Capital Receipts Applied (2,624) (2,500)

Pooled Capital Receipts (12)

Balance at 31st March 1,043 55

35 - UNUSABLE RESERVES

31st

March

2013

31st

March

2012

Restated £000 £000

Revaluation Reserve 25,018 26,066

Capital Adjustment Account 57,460 59,629

Deferred Capital Receipts Reserve 29 33

Pensions Reserve (48,985) (46,566)

Accumulated Absences Account (140) (83)

Total Unusable Reserves 33,382 39,079

a) Revaluation Reserve

The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant & Equipment. The balance is reduced when assets with accumulated gains are:

• Revalued downwards or impaired and the gains are lost


• used in the provision of services and the gains are consumed through depreciation, or

• disposed of and the gains are realised.

The Reserve contains only the revaluation gains accumulated since 1st April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.

31st March

2013

31st March

2012

£000 £000

Balance at 1st April 26,066 24,488

Upward revaluation of assets 1,081 1,652

Downward revaluation of assets (63)

Disposals (1,360)

Prior Year Adjustments (580)

Difference between fair value depreciation and

historical cost depreciation (189) (11)

Balance at 31st March 25,018 26,066

The prior year adjustments are in respect of the disposal of a car park that took

place in a prior year but had still been included in the value of Property, Plant & Equipment, and the transfer of the land at the Crematorium from Property, Plant

& Equipment to Community Assets.

b) Capital Adjustment Account

The Capital Adjustment Account absorbs the timing differences arising from the

different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition,

construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income & Expenditure

Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition,

construction and enhancement.

The Account contains accumulated gains and losses on Investment Properties

that have yet to be consumed by the Council.

The Account also contains revaluation gains accumulated on Property, Plant & Equipment before 1st April 2007, the date that the Revaluation Reserve was created to hold such gains.

Note 5 provides details of source of all the transactions posted to the Account,

apart from those involving the Revaluation Reserve.


31st March

2013

31st March

2012

£000 £000


Reversal of items relating to capital expenditure

debited or credited to the Comprehensive

Income & Expenditure Statement:

Sums set-aside for Debt Repayment 948 935

Charges for depreciation of non-current assets (2,588) (2,482)

Amortisation of intangible assets (251) (183)

Disposal of Investment Properties 0 (480)

Prior Year Adjustments (194) (8)

Revaluation Losses on Property, Plant &

Equipment (17) (311)

Revaluation Losses on Investment Properties 0 (385)

Revaluation Losses on Assets Held for Sale 0 (150)

Revenue expenditure funded from capital under

statute (3,328) (3,918)

Write-off of non-enhancing capital expenditure (277) (167)

Amounts of non-current assets written off on

disposal or sale as part of the gain/loss on

disposal to the Comprehensive Income &

Expenditure Statement (3,117) 0

(8,824) (7,149)

Adjusting amounts written out of the

Revaluation Reserve 1,549 11

Net written out amount of the cost of non-

current assets consumed in the year (7,275) (7,138)

Capital financing applied in the year:

Use of the Capital Receipts Reserve to finance

new capital expenditure 2,624 2,500

Capital grants & contributions credited to the

Comprehensive Income & Expenditure

Statement that have been applied to capital

financing 2,384 2,592

Application of grants to capital financing from the

Capital Grants Unapplied Account

Capital expenditure charged against the General

Fund balance 2,559

5,008 7,651

Movements in the market value of Investment

Properties debited or credited to the


Statement 98 (2,268)



c) Pensions Reserve

The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding

benefits in accordance with statutory provisions. The Council accounts for post employment benefits in the Comprehensive Income & Expenditure Statement as benefits are earned by employees accruing years of service, updating the

liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory

arrangements require benefits earned to be financed as the Council makes employer’s contributions to pension funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve

therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources that the Council has set aside to meet them. The

statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.

31st March

2013

31st March

2012

£000 £000


Actuarial gains or losses on pension assets

and liabilities 1,488 16,602

Reversal of items relating to retirement

benefits debited or credited to the Surplus or

Deficit on the Provision of Services in the


Statement 3,688 2,296

Employer's pension contributions and direct

payments to pensioners payable in the year (2,756) (2,674)



d) Deferred Capital Receipts Reserve

The Deferred Capital Receipts Reserve holds the gains recognised on the disposal of non-current assets for which cash settlement has yet to take place.

Under statutory arrangements, the Council does not treat these gains as usable for financing new capital expenditure until they are backed by cash receipts. When deferred cash settlement eventually takes place, amounts are transferred

to the Capital Receipts Reserve.

31st March

2013

31st March

2012

£000 £000

Balance at 1st April 33 67

Transfer to the Capital Receipts Reserve

upon receipt of cash (4) (34)

Balance at 31st March 29 33

d) Accumulated Absences Account

The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences

earned but not taken in the year, e.g. annual leave entitlement carried forward at 31st March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.

31st March

2013

31st March

2012

£000 £000

Balance at 1st April (83) (87)

Settlement of cancellation of accrual made at

the end of the preceding year 83 87

Amounts accrued by the end of the current

year

(0) 0

Amount by which officer remuneration

charged to the Comprehensive Income &

Expenditure Statement on an accruals basis

is different from the remuneration chargeable

in the year in accordance with statutory

requirements (140) (83)

Balance at 31st March (140) (83)


36 - CAPITAL EXPENDITURE & CAPITAL FUNDING

The total amount of capital expenditure incurred in the year is shown in the table below, together with the resources that have been used to finance it.

2012/13 2011/12

£000 £000

Capital Investment

Property, Plant & Equipment 1,338 3,436

Intangible Assets 342 297

Revenue Expenditure Funded from Capital

Under Statute 3,328 3,918

5,008 7,651

Sources of Finance

Capital receipts 2,624 2,500

Government grants & other contributions 2,384 2,592

Direct Revenue Contributions 0 2,559

5,008 7,651

37 - DEFINED BENEFIT PENSION SCHEMES

Participation in Pension Schemes

As part of the terms and conditions of employment of its officers, the Council makes contributions towards the cost of post employment benefits. Although

these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments that need to be disclosed at the time the

employees earn their future entitlement.

The Council participates in the Local Government Pension Scheme, administered

locally by Kent County Council – this is a funded defined benefit final salary scheme, meaning that the Council and employees pay contributions into a fund,

calculated at a level intended to balance the pensions liabilities with investment assets.

Transactions Relating to Post-employment Benefits

We recognise the cost of retirement benefits in the reported cost of services

when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make

against council tax is based on the cash payable in the year, so the real cost of post employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. The following transactions have been made in

the Comprehensive Income & Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year:


2012/13 2011/12

£000 £000


Statement

Cost of Services:

- Current service cost 2,399 1,825

- Past service costs 0 0

- Settlements & curtailments 9 226

Financing and Investment Income &

Expenditure:

- Interest cost 5,258 5,456

- Expected return on scheme assets (3,978) (4,759)

Total Post Employment Benefit Charged

to the Surplus or Deficit on the Provision

of Services 3,688 2,748

Other Post Employment Benefit Charged to

the Comprehensive Income & Expenditure

Statement:

- Actuarial gains & losses - -

Total Post Employment Benefit Charged

to the Comprehensive Income &

Expenditure Statement 3,688 2,748

Movement in Reserves Statement:

- Reversal of net charges made to the

Surplus or Deficit for the Provision of Services

for post employment benefits in accordance

with the Code 3,688 2,296

Actual amount charged against the General

Fund Balance for pensions in the year:

- Employers' contributions payable to the

scheme (2,756) (2,674)

The cumulative amount of actuarial gains and losses recognised in the Comprehensive Income & Expenditure Statement to 31st March 2013 is a loss of

£2.419m.


Assets and Liabilities in Relation to Post-employment Benefits

Reconciliation of present value of the scheme liabilities (defined benefit obligation):

2012/13 2011/12

£000 £000

Opening balance at 1st April 116,535 100,553

Current service cost 2,399 1,825

Interest cost 5,258 5,456

Contributions by scheme participants 646 636

Actuarial gains & losses 7,462 13,385

Benefits paid (4,973) (5,250)

Past service costs 0 0

Unfunded Pension Payments (199) (196)

Curtailments 9 241

Settlements 0 (115)

Closing balance at 31st March 127,137 116,535

Reconciliation of fair value of the scheme (plan) assets:

2012/13 2011/12

£000 £000


Expected Rate of Return 3,978 4,759

Actuarial gains & losses 5,974 (3,049)

Employer Contributions 2,757 2,958

Contributions by scheme participants 646 636


Payment of Bulk Transfer Values 0 (100)


The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment

policy. Expected yields on fixed interest investments are based on the gross redemption yields as at the Balance Sheet date.

Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.

The actual return on scheme assets in the year was £9.952m. (2011/12: £1.711m)


2012/13 2011/12

£000 £000


Expected Rate of Return 3,978 4,759

Actuarial gains & losses 5,974 (3,049)

Employer Contributions 2,757 2,958

Contributions paid by scheme particpants 646 636


Payment of Bulk Transfer Values 0 (100)


Scheme History

2008/09 2009/10 2010/11 2011/12 2012/13

£000 £000 £000 £000 £000

Present value of assets in the

Local Government Pension

Scheme 46,350 62,238 70,211 69,969 78,152

Fair value of assets in the Local

Government Pension Scheme 83,960 126,515 100,553 116,535 127,137

Surplus/(Deficit) in the

scheme (37,610) (64,277) (30,342) (46,566) (48,985)

The liabilities show the underlying commitments that the Council has in the long run to pay post employment (retirement) benefits. The total liability of £48.985m has a substantial impact on the net worth of the Council as recorded

in the Balance Sheet. However, statutory arrangements for funding the deficit mean that the financial position of the Council remains healthy. The deficit on

the local government scheme will be made good by increased contributions over the remaining working life of employees (i.e. before payments fall due), as assessed by the scheme actuary.

The total contributions expected to be made to the Local Government Pension

Scheme by the Council in the year to 31st March 2013 are £2.399m.

Basis for Estimating Assets and Liabilities

Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years

dependent upon assumptions about mortality rates, salary levels, etc. The scheme has been assessed by Barnett Waddingham, an independent firm of

actuaries, estimates for the Kent County Council Pension Fund being based on the latest full valuation of the scheme as at 31st March 2010.


The principal assumptions used by the actuary have been:

2012/13 2011/12

Long-term expected rate of return of

assets in the scheme:

Expected Return on Assets 5.8% 5.8%

Mortality assumptions:

Longevity at 65 for current pensioners:

- Men 20.1 20.0

- Women 24.1 24.0

Longevity at 65 for future pensioners:

- Men 22.1 22.0

- Women 26 25.9

Rate of inflation 3.3% 3.3%

Rate of increase in salaries 4.7% 4.7%

Rate of increase in pensions 2.5% 2.5%

Rate of discounting scheme liabilities 4.3% 4.6%

History of Experience Gains and Losses

The actuarial gains identified as movements on the Pensions Reserve in 2012/13 can be analysed in the following categories, measured as a percentage of assets

and liabilities at 31st March 2013:

2008/09 2009/10 2010/11 2011/12 2012/13

% % % % %

Difference between the

expected and actual return on

assets

-33.0 21.1 5.7 -4.4 7.6

Experience gains and losses

on liabilities 0.0 0.4 8.0 0.0 0.1


The Local Government Pension Scheme’s assets consist of the following categories, by proportion of the total assets held:

£000 % £000 %

Equities 55,488 71 51,777 74

Gilts 0 0 700 1

Other Bonds 10,160 13 6,997 10

Property 6,252 8 6,297 9

Cash 3,126 4 2,799 4

Target Return

Portfolio 3,126 4 1,399 2Total 78,152 100 69,969 100

31st March 2013 31st March 2012

38 - LEASES

Finance Leases – Council as Lessee

The Council currently has a number of arrangements which it classifies as

finance leases, covering the operation of the leisure centre, and vehicles used in the delivery of the waste collection and park & ride contracts.

The future minimum lease payments due under these arrangements in future years are:

31st March

2013

31st March

2012

£000 £000

Not more than 1 year 1,061 1,036

Later than 1 year and not later than 5 years 2,746 2,147

Later than 5 years 3,047 4,073

6,854 7,256

Operating Leases – Council as Lessee

The Council has a number of operating leases, primarily covering vehicles, plant,

equipment and refuse & recycling waste bins.

The future minimum lease payments due under non-cancellable leases in future years are:


31st March

2013

31st March

2012

£000 £000

Not more than 1 year 33 38

Later than 1 year and not later than 5 years 56 89

Later than 5 years 0 0

89 127

The expenditure charged to the Comprehensive Income & Expenditure Statement for 2012/13 in relation to these leases was as follows:

• Cultural & Related Services - £9,647 • Central Services - £148,249

• Total - £157,896

Operating Leases – Council as Lessor

The Council leases out property under operating leases for the following purposes:

• Domestic Dwellings

• Retail & Leisure Units • Light Industrial Units

The future minimum lease payments receivable under non-cancellable leases in future years are:

31st March

2013

31st March

2012

£000 £000

Not more than 1 year 82 108

Later than 1 year and not later than 5 years 24 74

Later than 5 years 764 747

870 929

39 - IMPAIRMENT LOSSES

During 2012/13 the Council did not identify any losses as a result of impairment.

40 - TERMINATION BENEFITS

The Council terminated the contracts of 9 employees in 2012/13, incurring liabilities of £0.042m (34 employees/£0.532m in 2011/12). The sums were

payable to a number of officers who were made redundant primarily as part of various structural changes that took place during the year. There are further details in Note 13 (Exit Packages).


41 - CONTINGENT LIABILITIES

The Council is also dealing with potential insurance claims in respect of

mesathelioma, which is a condition caused by exposure to asbestos. A number of former employees of the Council have, or may be, lodging claims with

Municipal Mutual Insurance, who were the Council’s insurers at the time the alleged exposure took place. One claim to the value of £55,000 has been settled,

and the estimated settlement costs currently totals £0.200m.

A group of Property Search Companies are seeking to claim refunds of fees paid

to the Council to access land charges data. Proceedings have not yet been issued. The Council has been informed that the value of those claims at present is estimated to be £31,000 plus interest and costs. The claimants have also

intimated that they may bring a claim against all English and Welsh local authorities for alleged anticompetitive behaviour. It is not clear what the value of

any such claim would be as against the Council. It is possible that additional claimants may come forward to submit claims for refunds, but none have been intimated at present.

42 - CONTINGENT ASSETS

There are no contingent assets to report.

43 – EVENTS AFTER THE REPORTING PERIOD

The Statement of Accounts was authorised for issue by the Director of Regeneration & Communities on 30th June 2013. Events taking place after this date are not reflected in the financial statement or notes. Where events taking

place before this date provided information about conditions existing at 31st March 2013 the figures in the financial statements and notes have been adjusted

in all material respects to reflect the impact of this information.

The financial statements and notes have not been adjusted for the following

events which took place after 31st March 2013 as they provide information that is relevant to an understanding of the Council’s financial position but do not relate to conditions at that date.

• New arrangements for the retention of business rates came into effect on

1st April 2013. Councils have assumed the liability for refunding ratepayers who have successfully appealed against the rateable value of their properties on the rating list. This includes amounts that were

previously paid over to central government in respect of 2012/13 and prior years. Previously these amounts would not have been recognised as

income by the Council. As at 1st April 2013 Maidstone’s share of this liability was calculated to be £2.758m.


44 – CASHFLOW STATEMENT - ADJUSTMENTS MADE TO NET SURPLUS OR DEFICIT ON THE PROVISION OF SERVICES FOR NON-CASH

MOVEMENTS

2012/13 2011/12

£000 £000

Depreciation (2,588) (2,483)

Revaluation Gains & Losses (293) (2,648)

Amortisation of Intangible Assets (251) (183)

Movement in Provisions 842 (392)

Movement in Creditors 347 5,210

Movement in Debtors 3,850 319

Movement in Inventories 3 21

Movement in Pension Liabilities (932) 378

Carrying amount of Non-Current Assets sold (3,117) (490)

Other Non-Cash items 98 18

(2,041) (248)

45 – CASHFLOW STATEMENT - ADJUSTMENTS FOR ITEMS INCLUDED IN THE NET SURPLUS OR DEFICIT ON THE PROVISION OF SERVICES THAT ARE INVESTING & FINANCING ACTIVITIES

2012/13 2011/12

£000 £000

Proceeds from Short and Long-Term

Investments 314

Capital Grants credited to surplus or deficit

on the provision of services 2,938 0

Proceeds from sale of Property, Plant &

Equipment 3,609 1,086

6,547 1,400


46 - CASH FLOW STATEMENT – OPERATING ACTIVITIES

2012/13 2011/12

£000 £000

Interest received (402) (314)

Interest paid 384 0

Dividends received 0 0

(18) (314)

47 - CASH FLOW STATEMENT – INVESTING ACTIVITIES

2012/13 2011/12

£000 £000

Purchase of property, plant & equipment,

investment property and intangible assets 2,189 4,032

Purchase of short-term and long-term

investments 7,000 30,000

Other payments for investing activities 0

Proceeds from the sale of property, plant &

equipment, investment property and intangible

assets (3,127) (1,086)

Proceeds from short-term and long-term

investments (7,000) (35,314)

Other receipts for investing activities (Grants) (3,901) 0

Net cash flows from investing activities (4,839) (2,368)

48 - CASH FLOW STATEMENT – FINANCING ACTIVITIES

2012/13 2011/12

£000 £000

Cash receipts of short & long-term borrowing

Other receipts from financing activities (974)

Cash payments for the reduction of

outstanding liabilities relating to finance leases

Repayments of short & long-term borrowing

Other payments for financing activities 947 66

Net cash flows from financing activities (27) 66


COLLECTION FUND STATEMENT & NOTES

2011/12

£000 £000 £000

INCOME

80,733 Income From Council Tax 81,784

Transfers From General Fund

10,080 Council Tax Benefit 10,213 91,997

52,144 Income From Non-Domestic Rates (Note 2) 54,568

142,957 Total Income 146,565

EXPENDITURE

Precepts and Demands

63,184 Kent County Council 63,899

8,363 Kent Police Authority 8,457

14,455 Maidstone Borough Council 14,678

4,098 Kent & Medway Towns Fire Authority 4,144 91,178

Non-Domestic Rates

51,940 Payments To National Pool 54,361

205 Cost of Collection Allowance 207 54,568

Bad and Doubtful Debts

154 Write Off 278

345 Additional / (Reduced) Provision For Non Payment 245 523

97 Contribution toward previous year's Collection Fund surplus

142,841 Total Expenditure 146,269

116 Surplus/(Deficit) For Year 296

36 Surplus Brought Forward From Previous Years 152

152 Surplus as at 31st March 2013 448

2012/13


Notes to the Collection Fund

Note 1 – Council Tax

Council Tax income derives from charges raised according to the value of residential properties, which have been classified into 8 valuation bands

estimating, for this specific purpose, 1 April 1991 values. Individual charges are calculated by estimating the amount of income required to be taken from the

Collection Fund by Kent County Council, the Kent Police & Crime Commissioner and the Kent & Medway Towns Fire & Rescue Authority and this Council for the forthcoming year and dividing this by the council tax base [the total number of

properties in each band adjusted by a proportion to convert the number to a Band D equivalent and adjusted for discounts: 60,985.3 for 2012/13 (60,301.1

for 2011/12) (see table below)]. This basic amount of council tax for a Band D property £1,476.80 for 2012/13 (£1,476.80 for 2011/12) is multiplied by the proportion specified for the particular band to give an individual amount due.

Parish Precepts are added to this basic amount.

The bands, number of dwellings in each, the multiplier for each and the resultant tax base are detailed in the table below.

Band

Number of

Dwellings Multiplier

Council Tax

Base

Band A (incl disabled relief) 2.50 5/9 1.4

Band A 3,277.75 6/9 2,185.2

Band B 7,067.00 7/9 5,496.6

Band C 15,752.25 8/9 14,002.0

Band D 15,682.00 9/9 15,682.0

Band E 8,277.50 11/9 10,116.9

Band F 4,789.75 13/9 6,918.5

Band G 3,521.00 15/9 5,868.3

Band H 297.00 18/9 594.0

Other 120.4

60,985.3

Council tax income as follows:

£000

Initial Accounts 101,352

Additional Accounts 75,037

Less: Reduced Accounts (84,114)

92,275

Less: Amounts written off (278)

Net Income to Fund 91,997


Note 2 - Income from Non-Domestic Rates

Under the National System for non-domestic rates, the Council collects from local businesses an amount equal to the rateable value of their property multiplied by a uniform rate set by the Government. This money is paid into a

National Pool. The Council receives in return a contribution from the Pool based on a standard amount per head of local adult population. This is paid into the

Council's General Fund.

Non-Domestic Rate Income to the Collection Fund is as follows:

£000

Non-Domestic Rateable Value £139.671m 69,249

(£139.904m in 2011/12)

Non-Domestic Rate Multiplier 45.8p (43.3p in 2011/12)

Small Business Multiplier 45.0p (42.6p in 2010/11)

Less: Allowances and adjustments during the year (14,681)

Net Income to Fund 54,568

Note 3 - Surplus/(Deficit) on the Collection Fund re Council Tax

Any surplus at the year end is distributed amongst the precepting authorities over the following two financial years. A deficit must be covered by council tax

raised the following year. The distribution for 2010/11 given in the tables below is of a surplus.


Surplus at 31st March 2012 (£000)

Distribution: 2012/13 2013/14

£000 £000

Maidstone Borough Council 25

Kent County Council 107

Kent Police Authority 14

Kent & Medway Towns Fire Authority 7

153

2012/13 Surplus (£000)

Distribution: 2013/14 2014/15

£000 £000

Maidstone Borough Council 68

Kent County Council 312

Kent Police Authority 40

Kent & Medway Towns Fire Authority 27

447

The amount distributed has to be used by each authority to reduce the amount of Council Tax that they have to raise to finance their own expenditure. The

distribution is calculated by reference to the proportion of the respective precepts and demands made in the previous year.

Note 4 - Amounts Written Off

The following amounts were written off during the year:

2010/11 2011/12 2012/13

£000 £000 £000

Council Tax 99 154 278

Non-Domestic Rates 499 380 949

Community Charge

598 534 1,227


GLOSSARY OF TERMS

ACCOUNTING POLICIES

The specific policies and procedures used by the Council to prepare the Statement of Accounts. These include any methods, measurement systems and

procedures for presenting disclosures.

ACCOUNTS

Statement aggregating items of income and expenditure and assets and

liabilities. The accounts may show detailed transactions for every activity (generally used for management and control purposes during a financial year) or be summarised to show the overall position at the end of the period. The latter

are known as final accounts and show both the net surplus (profit) or deficit (loss) and a balance sheet of the assets, liabilities and other balances at the end

of the accounting period. Councils are required to publish a Statement of Accounts as specified in the Accounts and Audit Regulations 2011.

ASSETS HELD FOR SALE

Assets that the Council are actively marketing for sale, and for which there is a

reasonable expectation that the sale will take place within one year of the Balance Sheet date.

BALANCE SHEET

A statement of the assets, liabilities and other balances of the Council at the end of an accounting period.

BALANCES

Capital or revenue reserves of the Council made up of the accumulated surplus of income over expenditure on the general fund or any other account. Revenue balances may be utilised to provide for unforeseen circumstances, to ensure that

payments can be made pending the receipt of income, and if justified they may be used to reduce the collection fund levy.

CAPITAL EXPENDITURE

Generally, expenditure which is of value to the Council in the provision of services beyond the end of the financial year in which it was incurred, e.g.

purchase of land and buildings, construction or improvement of buildings.

CAPITAL FINANCING

The raising of money to pay for capital expenditure. Usually the cost of capital assets is met by borrowing, but capital expenditure may also be financed by

other means such as leasing, contributions from the revenue accounts, the proceeds of the sale of capital assets, capital grants, reserves and other

contributions.


CAPITAL RECEIPTS

Proceeds from the sale of capital assets. Capital receipts can be used to repay the debt on assets financed from loan or to finance new capital expenditure,

subject to compliance with statutory requirements.

COLLECTION FUND

Councils that collect precepts and non-domestic rates on behalf of other authorities are required to maintain a Collection Fund to summarise the

collection and payments of precepts, and any associated adjustments.

CREDITORS

Amounts owed by the Council for work done, goods received, or services

rendered but for which payment had not been made at the date of the balance sheet.

DEBTORS

Sums of money due to the Council but unpaid at the balance sheet date.

DEPRECIATION

The measure of the wearing out, consumption, or other reduction in the useful economic life of a fixed asset, whether arising from use, passage of time or

obsolescence through technological or other changes.

GENERAL FUND

The main revenue account of a charging authority that summarises the cost of

all services provided by the Council.

HERITAGE ASSETS

Heritage Assets are defined as assets with historical, artistic, scientific,

technological, geophysical or environmental qualities that are held and maintained principally for their contribution to knowledge or culture.

INTANGIBLE ASSETS

Intangible assets are assets that do not have a physical substance but are identifiable and controlled by the authority, such as computer software.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

These are the accounting standards (as adapted for the public sector) that the

Council are required to follow when preparing the annual Statement of Accounts.

INVESTMENT PROPERTIES

Investment properties are those that are used solely to earn rentals and/or for

capital appreciation.


PROPERTY, PLANT & EQUIPMENT

Assets that have physical substance and are held for use in the provision of services or for administrative purposes on a continuing basis.

REVENUE EXPENDITURE FUNDED FROM CAPITAL BY STATUTE

Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of propery, plant or equipment, and is charged as expenditure to the relevant service revenue account in the

year.

REVENUE SUPPORT GRANT

A general grant paid by central government to local authorities to help finance

the cost of services. It is paid to charging authorities for credit to the Collection Fund.

REVENUE ACCOUNT

An account which records the day to day expenditure and income of the Council on such items as salaries and wages, running costs of services, the purchase of consumable materials and equipment, and the financing costs of capital assets.

SUPPORT SERVICES

An allocation of the net cost of the administrative and professional departments which provide support for all the Council’s services (e.g. Executive Services,

Finance, Personnel), together with the costs of pooled administrative buildings.

USABLE CAPITAL RECEIPTS

Funds received by an authority from the sale of capital assets that have yet to

be used to finance capital expenditure or repay debt.

UNUSABLE RESERVES

These are non-cash reserves that are kept to manage the accounting processes for non-current assets, retirement benefits and employee benefits and do not

represent usable resources for the Council.

USABLE RESERVES

These are funds available to the Council and represent specific amounts set-

aside for future policy purposes or earmarked purposes, including the General Fund and the Capital Receipts Reserve.


INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MAIDSTONE BOROUGH COUNCIL

Opinion on the Authority financial statements

We have audited the financial statements of Maidstone Borough Council for the year ended 31 March 2013 under the Audit Commission Act 1998. The financial

statements comprise the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Cash Flow

Statement and Collection Fund and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United

Kingdom 2012/13.

This report is made solely to the members of Maidstone Borough Council in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the Statement of Responsibilities of

Auditors and Audited Bodies published by the Audit Commission in March 2010. To the fullest extent permitted by law, we do not accept or assume responsibility

to anyone other than the Authority and the Authority's Members as a body, for our audit work, for this report, or for the opinions we have formed

Respective responsibilities of the Director of Regeneration & Communities and auditor

As explained more fully in the Statement of the Director of Regeneration &

Communities Responsibilities, the Director of Regeneration & Communities is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the

CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom, and for being satisfied that they give a true and fair view. Our

responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices

Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the

financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or

error. This includes an assessment of: whether the accounting policies are appropriate to the Authority’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates

made by the Director of Regeneration & Communities; and the overall presentation of the financial statements. In addition, we read all the financial

and non-financial information in the explanatory foreword to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications

for our report.


Opinion on financial statements

In our opinion the financial statements: • give a true and fair view of the financial position of Maidstone Borough Council

as at 31 March 2013 and of its expenditure and income for the year then ended; and

• have been properly prepared in accordance with the CIPFA/LASAAC Code of

Practice on Local Authority Accounting in the United Kingdom 2012/13.

Opinion on other matters In our opinion, the information given in the explanatory foreword for the

financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we report by exception

We report to you if: • in our opinion the annual governance statement does not reflect compliance

with ‘Delivering Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June 2007;

• we issue a report in the public interest under section 8 of the Audit Commission Act 1998;

• we designate under section 11 of the Audit Commission Act 1998 any

recommendation as one that requires the Authority to consider it at a public meeting and to decide what action to take in response; or

• we exercise any other special powers of the auditor under the Audit Commission Act 1998.

We have nothing to report in these respects

Conclusion on the Authority’s arrangements for securing economy, efficiency and effectiveness in the use of resources

Respective responsibilities of the Authority and the auditor

The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and

effectiveness of these arrangements.

We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit

Practice issued by the Audit Commission requires us to report to you our conclusion relating to proper arrangements, having regard to relevant criteria

specified by the Audit Commission.

We report if significant matters have come to our attention which prevent us from concluding that the Authority has put in place proper arrangements for

securing economy, efficiency and effectiveness in its use of resources. We are


not required to consider, nor have we considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in

its use of resources are operating effectively.

Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We have undertaken our audit in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria, published by the Audit

Commission in November 2012, as to whether the Authority has proper arrangements for:

• securing financial resilience; and • challenging how it secures economy, efficiency and effectiveness.

The Audit Commission has determined these two criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether

the Authority put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2013.

We planned our work in accordance with the Code of Audit Practice. Based on

our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Authority had put in place proper arrangements to secure economy, efficiency and effectiveness in its use

of resources.

Conclusion On the basis of our work, having regard to the guidance on the specified criteria

published by the Audit Commission in November 2012, we are satisfied that, in all significant respects, Maidstone Borough Council put in place proper

arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2013.

Certificate

We certify that we have completed the audit of the financial statements of Maidstone Borough Council in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit

Commission.

Darren Wells, Director for and on behalf of Grant Thornton UK LLP, Appointed Auditor

Fleming Way Manor Royal

Crawley RH10 9GT

30th September 2013

statement of accounts 2012-13 · statement of accounts the council's accounts for the year...

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